A potential revolution in Iran could spell trouble for the international oil market
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Oh, great. Another doom and gloom piece on the global economy from the FT: The potential for a revolution in Iran against the Islamic regime means the international oil market could be in for “a bumpy ride,” Nick Butler writes for the Financial Times. While it seems unlikely that recent protests will snowball into a full-fledged revolution that would undo the Islamic Revolution, Butler points out that most thought it was unlikely that the Islamic Revolution would succeed for decades ago. But if regime change does happen, Iranian oil production would drop, creating a supply gap that other oil producing countries — including Saudi Arabia — would scramble to fill. “The prospect of instability in Iran is probably discounted in the current oil price. If the situation does deteriorate, no doubt speculation will drive the price higher, but investors should take a longer view as well … As ever volatility and speculation do not move in one direction for long.”