Iran nuclear crisis is calming down, but don't wait the oil price to go down...
The Iran nuclear case marks an improvement with optimistic
comments from both sides. After the weekend Istanbul meeting, a new round of
negotiations is scheduled in 6 weeks - this time in Baghdad. All this means
that there will be no war for at least next 2 months. Therefore, if Iran
nuclear problems were the reason for rising oil price, so now the oil must go
In fact we will not see this. Of course, it is possible a small correction down
in the price. Corrections happen repeatedly - with or without Iran-problems or
Iran-decision of problems. Corrections are an element of the market game. But
we will not see a deep and stable lowering of oil-price. Because it is not Iran
the reason for skyrocketing prices. The real reason is flooding the financial
markets with liquidity in attempt to lower the interest rates on government
debts. This money is creating inflation and usually the energy and food
resources are the most vulnerable to inflation.
In last few years not only the oil is going up. The food is also up. And Iran
is not a major food supplier. Iran is even a food-importer. So it is not
possible Iran nuclear activities to pump the food prices up. But it happens.
Therefore the real reason for this is something different from a regional
crisis in Middle East. If Iran was the reason for oil-price-rise, then only the
oil would go up, and not the food. But they both are going up. And much other
resources too (like gold). So obviously the situation is inflationary-backed
and not military-crisis-backed. And as the inflationary factors are still
active, therefore it is not logical to expect serious lowering of oil-prices.
They will go up in mid and long term, and every small correction (inspired by
Iran talks or by other factors) is not a fundamental change of the trend. In
fact it is a good moment to buy..