Iran War and the Impact on Oil

[timsk]

One of the debates that has cropped up from time to time on T2W is the thorny topic of ethics and trading. It's up to each member to make up their own minds as to where they stand on this issue. In this case, the issue is whether or not you're prepared to try to profit from war. If you can live with that, here's a potential no brainer of a trade to take if Trump completely loses his mind and initiates WW3 by attacking Iran (again).

The west in general - and the U.S. in particular - grossly underestimate the military capabilities of the Iranians. Big mistake, huge, massive. Like the Russian Oreshnik, they have hypersonik missiles against which there's virtually no defense. Watch out Israel! On top of that, if their hand is forced, they could close the Straight of Hormuz. This would be catastrophic for world trade and especially for the price of oil which would go through the roof. Some anecdotal reports I've read suggest price will soar to $700 a barrel.

The (insane) gamble that Trump (and Netanyahu) are taking is that Iran won't close the straight because they would suffer as much - if not more - as everyone else; i.e. they'd be shooting themselves in the foot. However, the Iranians have lived under the most stringent U.S. sanctions for a quite a while now so, in their minds, they may think they've got little to lose.

So, keep an eye on oil and if the war drums get louder in the next week or so and price starts to creep up - go long with a wide stop. Attached below is a monthly chart of Brent Crude to provide a macro perspective. If I were to trade this I'd look for price to break the red trendline and have a stop around $58.00. For the more conservative among you that might not be comfortable with the volatility that might be unleashed - go long gold instead.

Needless to say, this is just my £0.02p worth and hopefully, the U.S. won't attack Iran and the price of oil will stay roughly where it is!

 

[timsk]

Iran partially closes Strait of Hormuz, a vital oil choke point, as Tehran holds talks with U.S.​

Yes, it's just a temporary and partial closure - but it sends a powerful signal: Iran has friends and options. It's highly unlikely they've taken this decision unilaterally without the approval of both the Chinese and the Russians. Other than the insane Netanyahu, no one in the middle east wants war with Iran - with the possible exception of the UAE. The danger is that Israel takes the gamble that if they kick things off and Iran strikes back - which they absolutely will - that the U.S. will come to Israel's defense.

All the focus in recents weeks / months has been on Epstein and what he had on - and over - the billionaire elite class. I think it's fair to assume the incriminating evidence in the Epstein files is nothing compared to what Mossad and the Isrealis have on Trump and numerous other senior people in both the current and former administrations. What else explains why the U.S. is so subserviant to Isreal and agrees to any and every demand that it makes?

To the markets: as you'd expect, it's a strong start to the day for gold.
Tim.

 

[Rufus_Leakey]

Iran partially closes Strait of Hormuz, a vital oil choke point, as Tehran holds talks with U.S.​

Yes, it's just a temporary and partial closure - but it sends a powerful signal: Iran has friends and options. It's highly unlikely they've taken this decision unilaterally without the approval of both the Chinese and the Russians. Other than the insane Netanyahu, no one in the middle east wants war with Iran - with the possible exception of the UAE. The danger is that Israel takes the gamble that if they kick things off and Iran strikes back - which they absolutely will - that the U.S. will come to Israel's defense.

Fully closing the Strait of Hormuz would be an example of cutting off one's nose to spite one's face.

Strait of Hormuz - Iran and Oil - The Strauss Center

Iran's economy is dominated by trade. Because nearly all of Iran's oil export terminals and large ports are located within the Persian Gulf, Iran depends on the Strait of Hormuz for its economic well-being. Closing the Strait would certainly hurt the Iranian economy. Like many other Persian Gulf...

www.strausscenter.org

Like many other Persian Gulf countries, Iran’s economy depends on oil export revenues, the bulk of which traverse the Strait of Hormuz. Iran exports about 2.6 million barrels of oil per day, and oil export revenues account for some 85% of all Iranian government revenue. Due to insufficient domestic refining capacity[ii], Iran also relies heavily on the Strait for gasoline imports, estimated at 400,000 barrels per day.[iii]

Roughly 90 percent of Iran’s oil exports pass through the Strait of Hormuz each year,[iv] representing approximately 83 percent of all Iranian exports.[v] Iran’s oil export facilities are all located in the Persian Gulf. The only major oceanic port, Chah Bahar, has no deepwater piers (capable of handling large oil tankers) or pipeline infrastructure connecting it to Iran’s oil infrastructure. Therefore, Iran’s oil exports must traverse the Strait.

And, Iran's "friends" didn't do much when the U.S. and Israel attacked Iran last year. Would this time be different?
Google AI Overview says

Russia, China, and North Korea responded to the U.S. and Israeli bombing of Iran in June 2025 primarily with rhetoric, offering strong diplomatic condemnation of the strikes while avoiding direct military intervention. They condemned the actions as "unprovoked aggression" and violations of international law, accusing the U.S. of escalating regional tensions.

Milwaukee Independent +4

• • Russia: President Putin and his government labeled the strikes as "unjustified" and "unprovoked," warning that the actions risked a wider conflict.
  • China: The Chinese Foreign Ministry condemned the attack, stating it violated international law and exacerbated tensions, while urging all sides to de-escalate.
  • North Korea: Pyongyang denounced the strikes, accusing the U.S. and Israel of violating Iranian sovereignty and trampling on security interests.
    
    
    Milwaukee Independent +1

I see no good reason for anyone to attack Iran at the moment, but I'm not in charge, of course.😉