Tag: Iran

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No Quick Exit

Key Points

  • Brent crude futures (May’26) rose after President Trump paused his threatened attack on Iran’s energy facilities until April 6.
  • The S&P 500 broke primary support at 6550.
  • The Dollar strengthens with the prospect of higher interest rates.
  • Gold tests primary support at $4,400 per ounce.

Brent crude rallied to $109 per barrel on news that negotiations may take longer than initially indicated. Retracement will likely respect support at $105 per barrel, signaling another test of $114.

Brent Crude Futures (ICE May'26)

Markets continue to receive conflicting messages on the war with Iran.

President Trump said he would extend a pause to attack Iran’s energy facilities to April 6, a little over a week after the original deadline that was set to end Friday.

“As per Iranian Government request, please let this statement serve to represent that I am pausing the period of Energy Plant destruction,” Trump said in a Truth Social post. “Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well. Thank you for your attention to this matter!” (CNBC)

Iran’s Foreign Minister ruled out direct talks with the US but says they are reviewing the US 15-point proposal submitted through Pakistani intermediaries.

House Speaker Mike Johnson said Wednesday that Operation Epic Fury is “almost done” and is “wrapping up.”

….Johnson said that the objectives of the operation “have been met,” but access to the Strait of Hormuz still needs to be “straightened out.” (CBS)

The military buildup continues:

WASHINGTON, March 24 (Reuters) – The Pentagon is expected to send ​thousands of soldiers from the U.S. Army’s elite 82nd Airborne Division to the Middle East, two people familiar with the ‌matter told Reuters on Tuesday, adding to a massive U.S. military buildup even as President Donald Trump talks about a possible deal with Tehran to end the war.

The New York Post:

The Pentagon is reportedly considering a plan to send an additional 10,000 troops to the Middle East amid the war with Iran.

The potential deployment would likely include infantry and armored vehicles and would be on top of the 5,000 Marines and sailors and roughly 2,000 members of the Army’s 82nd Airborne Division who have already been dispatched to the region, according to the Wall Street Journal.

When one party threatens the other, it is normally a sign that the negotiation is not going well:

President Trump is ready to “unleash hell” on Iran if Tehran does not accept a deal to end the war in the Middle East, the White House warned on Wednesday.

“If Iran fails to accept the reality of the current moment, if they fail to understand that they have been defeated militarily and will continue to be, President Trump will ensure they are hit harder than they have ever been hit before,” Press Secretary Karoline Leavitt said in a briefing.

“President Trump does not bluff and he is prepared to unleash hell.” (CBS)

Iran and Israel seem to have longer-term objectives, but President Trump is desperate for an off-ramp. Opinion polls show the war is unpopular in the US:

Reuters/Ipsos Opinion Poll

The Iranians know that the closer it gets to the US midterms in November, the greater their leverage.

Trump has few good options: escalate the conflict or settle on a potentially bad deal with a weakened yet defiant Iran that has choked off much of the world’s oil supply….

A clear and quick victory could pay dividends for Trump politically. But a settlement that credibly contains Iran appears to be far off….

The terms required to wind the war down may involve concessions to Tehran that do not satisfy Israel, which appears to want to press ahead. (Reuters)

Copper continues its downtrend, warning that the global economy is slowing.

Copper

Mega-cap technology stocks are dragging the major indices lower. The Roundhill Magnificent 7 ETF (MAGS) signals a strong bear trend after breaking primary support at 63 in early February.

Roundhill Magnificent 7 ETF (MAGS)

The S&P 500 has now followed with a breach of primary support at 6550, confirmed by the recent dead cat bounce.

S&P 500

The Dow Jones Industrial Average is testing the primary support band between 45,500 and 46,000. A breach would confirm the S&P 500 bear market signal.

Dow Jones Industrial Average

The S&P 500 Equal-Weighted Index ($IQX) shows that large caps are now outperforming mega caps, which had led the market for several years. It’s all relative, however. Declining Trend Index peaks below zero warn of selling pressure.

S&P 500 Equal-Weighted Index

Bitcoin1 continues to test the support band between 64,000 and 70,000, indicating that financial markets have become risk-averse.

Bitcoin (BTC)

10-year Treasury yields respected support at 4.3%, offering a short-term target of 4.65% as the prospect of further rate cuts fades.

10-Year Treasury Yield

The US Dollar Index is testing resistance at 100, driven by the prospect of higher interest rates.

Dollar Index

Gold is testing primary support at $4,400 per ounce. Respect, indicated by recovery above $4,600, would indicate another test of $5,000, while a breach would offer a target of $4,000.

Spot Gold

Conclusion

Mixed messaging over negotiations with Iran indicates that progress is slow. Conflicting objectives between the US and Israel may also prevent a quick resolution to the war against Iran. A quick exit is unlikely.

A downtrend in copper prices warns that the global economy is slowing.

The S&P 500 broke support at 6550, signaling a primary downtrend. A Dow Jones Industrial Average breach of primary support at 45,500 would confirm a bear market.

The prospect of higher interest rates, with the market pricing out further rate cuts, has strengthened the Dollar, triggering a selloff in gold. A breach of primary support at $4,400 per ounce would offer a target of $4,000, while respect of support would signal another test of $5,000.

Acknowledgments

Notes

  1. Cryptocurrencies are the highest-risk asset class, and we analyze Bitcoin (BTC) solely to identify risk sentiment in financial markets. Our analysis is not a recommendation to buy or sell BTC, nor is it a commentary on the merits of cryptocurrency.
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Crude Oil Spikes But Gold Falls

Key Points

  • Iranian missiles damaged Qatar’s Ras Laffan Industrial City, the world’s largest LNG export facility.
  • Brent crude futures spiked to $115 per barrel.
  • The Fed kept the fed funds target rate unchanged at 3.50%-3.75%.
  • Gold is testing support at $4,800 per barrel.

From CNBC:

Qatar said Wednesday that Iranian missiles caused “extensive damage” at Ras Laffan Industrial City, home to the largest liquefied natural gas, or LNG, export facility in the world….

Qatar halted LNG production on March 2 due to Iranian drone strikes at Ras Laffan and Mesaieed Industrial City. The Gulf state is the second-largest LNG exporter in the world, after the US Qatar accounts for nearly 20% of global LNG exports, according to data from energy consulting firm Kpler.

Iran is also attacking oil export facilities outside the Persian Gulf to further restrict global energy supply. From Reuters yesterday:

Omani ​crude – exported from a terminal outside the Strait of Hormuz – is trading at a record premium of $51 a barrel to Brent, compared with an average of just 75 cents in February, pushing the outright price to around $150 a barrel for May ​loading.

A similar pattern is playing out elsewhere. Cash premiums for Dubai crude jumped to $56 a barrel on Monday from an average of 90 cents in February, according to data from S&P Global Platts and Reuters.

The surge reflects the enormous uncertainty over the actual amount of supply available amid repeated Iranian strikes on oil terminals in Oman and at Fujairah, the United Arab Emirates’ main oil-exporting terminal outside Hormuz.

Brent crude futures (ICE May’26) climbed to $115 per barrel.

Brent Crude Futures

Fed Monetary Policy

Meet the new head of monetary policy at the Fed.

Iran's Supreme Leader: Mojtaba Khamenei

Spoiler alert: it’s not Kevin Warsh. Iranian cleric, Mojtaba Khamenei, recently appointed supreme leader of the Islamic state, now dictates global monetary policy.

Iran’s chokehold over Gulf states crude oil and LNG production will dominate global employment, inflation, and liquidity for the foreseeable future.

The Fed was on track for further rate cuts, with financial markets expecting three cuts by year-end as the economy slowed and the labor market shed 92,000 jobs in February.

Employment Growth

However, the attack on Iran has flipped the script. Rising crude oil prices are expected to increase inflationary pressure and restrict the Fed’s ability to cut rates.

Core PCE inflation, the Fed’s preferred measure of underlying inflation, had already increased to 3.1% for the 12 months to January 2026, from 2.6% in April 2025.

PCE & Core PCE

Rising energy prices (LHS) will likely cause a spike in CPI (RHS) similar to the increase in 2021 and ’22.

CPI & CPI Energy

Moody’s Baa corporate bond spread climbed to 1.85% on March 17, warning of tighter liquidity in financial markets.

Moody's Baa Corporate Bond Spread

The S&P 500 retreated to 6,625 following news of renewed Iranian attacks. We expect a test of primary support at 6550.

S&P 500

Copper broke support at $12,500 per tonne, anticipating a contraction in demand as the global economy slows.

Copper

Gold broke support at $5,000 per ounce, finding short-term support at $4,800. Axel Merk attributes the recent sell-off to “deleveraging among speculators, global growth headwinds, and an oversold condition in some markets after a very strong January run-up.”

Spot Gold

However, there was a similar sell-off in March 2020 (below), shortly after the outbreak of the COVID-19 pandemic. A liquidity contraction and the rebalancing of risk-parity funds caused a sell-off across all major asset classes, including stocks, bonds, and precious metals. Gold recovered in April, rallying to $2,050 per ounce by August 2020.

Spot Gold

Gulf states could also be liquidating reserves to support their economies while oil exports are restricted.

The monthly chart below shows the long-term uptrend since March 2024, when gold broke out above resistance at $2,000. We are now witnessing a pull-back to test primary support at $4,500. Respect of support will likely signal another strong advance.

Spot Gold

Conclusion

The Fed is powerless to fight inflation caused by the Iranian chokehold over global energy supplies. They are also constrained in their ability to use monetary policy to support a weak labor market because of the looming threat of inflation.

Our bullish thesis for gold remains. Precarious sovereign debt levels limit governments’ ability to support their economies without fueling inflation. Political leaders are also reluctant to adopt more restrictive fiscal policy because of the impact on their economies. The outcome will likely be prolonged currency debasement through inflation, with gold bullion eventually replacing US Treasuries as the global reserve asset.

Acknowledgments

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US-Iran Update

From Vali Nasr, professor at Johns Hopkins University and author of Iran’s Grand Strategy: A Political History:

The US appears poised to launch a major military attack on Iran. The last round of talks between the two countries was an opportunity for Iran to avert war but Tehran offered little to Washington. That is not because Iran’s rulers are too obdurate and caught up in their old ways of thinking. Rather they are putting little stock in diplomacy and increasingly see war as inevitable. They see talks more as a trap than a solution and seem to view an unavoidable war as more cathartic than a weak deal. They are focused on how to manage it — and even use it to their advantage.(FT.com)

From Linus Höller at Defense News:

BERLIN — Bulgaria’s Sofia International Airport briefly suspended civilian air operations twice over the weekend while a fleet of American military aircraft staged at the facility, fueling speculation that Washington is positioning forces ahead of a potential strike on Iran.

Photographs circulating on social media showed at least six KC-135 Stratotanker refueling aircraft from the 6th Air Refueling Wing at MacDill Air Force Base, Florida, along with C-17 and C-130 cargo planes and Boeing 747s typically used for troop transport, parked at the airport’s Terminal 1, according to Obektivno.BG.

Bulgaria’s Ministry of Defense confirmed the U.S. Air Force presence, describing the deployment as support for “training related to NATO’s enhanced vigilance activities,” …..

Bulgarian investigative journalists have tracked more than 120 U.S. Air Force aircraft that crossed the Atlantic within days, including four dozen F-16s, three squadrons of F-35A stealth fighters, and 12 F-22 Raptors.

Similar deployments, including F-22s staged at RAF Lakenheath, preceded last June’s Operation Midnight Hammer strikes on Iranian nuclear facilities.

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Gold, the Dollar and a big hole in the desert

Summary

  • Stocks rallied on news of a ceasefire between Iran and Israel
  • But celebrations may be premature
  • The dollar weakened, which is likely to boost demand for gold

The S&P 500 rallied to test resistance at 6100. Breakout would signal a fresh advance, but declining Trend Index peaks warn of selling pressure.

S&P 500

Uncertainty remains high.

The White House was quick to claim victory after the US airstrike on Iranian nuclear enrichment facilities. But claims that the subsequent ceasefire is the start of a new era of peace in the Middle East will likely prove premature.

A ceasefire is not a peace settlement. It’s a pause in hostilities that allows both parties to rearm and re-strategize.

A precision strike is nothing more than a big hole in the desert, the effectiveness of which can only be determined by subsequent Iranian actions.

The damage assessment reported by CNN is premature, but it does raise some interesting questions.

The assessment, which has not been previously reported, was produced by the Defense Intelligence Agency, the Pentagon’s intelligence arm. It is based on a battle damage assessment conducted by US Central Command in the aftermath of the US strikes, one of the sources said.

The analysis of the damage to the sites and the impact of the strikes on Iran’s nuclear ambitions is ongoing, and could change as more intelligence becomes available.

….Two of the people familiar with the assessment said Iran’s stockpile of enriched uranium was not destroyed. One of the people said the centrifuges are largely “intact.” Another source said that the intelligence assessed enriched uranium was moved out of the sites prior to the US strikes. (CNN)

If the stockpile of enriched uranium were moved or otherwise not destroyed, how would this affect Israel’s security?

The only way to finish this is with boots on the ground. Neither Israel nor President Trump is likely to commit to that.

In the Treasury market, 10-year yields declined to 4.3%, easing the pressure on stocks.

10-Year Treasury Yield

However, the dollar continues to weaken, with the US Dollar Index testing support at 98. A breach would confirm our target of 90.

Dollar Index

The chart below shows how Brent crude and the dollar moved contra-cyclically, with the dollar weakening when crude oil prices rose, and vice versa.

However, that changed shortly before Russia’s full-scale invasion of Ukraine in 2022, the dollar strengthened despite a spike in energy prices, diverging from past behavior as investors sought safety. The divergence continues, with the dollar weakening while crude oil prices are falling. The dollar’s role is under threat.

Brent Crude & USD Index for Advanced Economies

Investors globally appear to be gradually reducing their exposure to dollar-denominated assets, driving the greenback down to its lowest level against a basket of major currencies in three and a half years….

According to Bank of America’s FX strategy team, European “real money” investors – institutions like pension funds and insurance companies – are the main drivers of the dollar’s selloff in the second quarter, slashing their dollar positioning to the lowest since 2022 in a matter of weeks.

But the story might not be so straightforward…. research shows that most of the dollar’s average daily declines in the last few months have come in Asian trading hours, suggesting Asian holders of U.S. bonds may also be increasing their dollar hedges. (Reuters)

Demand for gold remains strong as the dollar weakens, with the metal finding support at $3,300 per ounce. Respect of this level would signal another test of resistance at $3,400.

Spot Gold

Conclusion

Stocks have rallied, but uncertainty in the Middle East remains high.

Long-term Treasury yields have softened, but the dollar continues to weaken, reflecting uncertainty over the US role in the global monetary system.

Private investors have replaced central banks as major investors in US Treasuries. They are far more price sensitive, and both European and Asian investors are increasingly hedging their dollar positions, expecting dollar weakness.

A weakening dollar is expected to boost demand for gold.

Acknowledgments

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Israel strikes first

Summary

  • Israel struck nuclear facilities and military command structures in Iran
  • The government declared a state of emergency in anticipation of retaliatory attacks from Iran
  • US Secretary of State Rubio indicated that the US had been notified but was not involved in the strikes
  • Iran had earlier threatened to attack US bases in the Middle East in response to any attack

Israeli Premier & F35 Fighter Jet

Israeli Premier Benjamin Netanyahu with F35 Fighter Jet

Israel launched dozens of air strikes targeting Iran’s nuclear facilities, ballistic missile factories, senior military commanders, and nuclear scientists on Friday, warning that this would be a prolonged operation. (FT & Reuters)

The strikes come after an International Atomic Energy Agency (IAEA) resolution on Thursday declared Iran in noncompliance with its nuclear safeguards obligations for the first time in nearly 20 years….Iran’s uranium enrichment has reached 60% purity — a dramatically higher level that is a short technical step from the weapons-grade purity level of 90%. “A country enriching at 60% is a very serious thing. Only countries making bombs are reaching this level,” IAEA chief Rafael Grossi said in 2021. (CNBC)

Iran’s Defense Minister Aziz Nasirzadeh told reporters Wednesday that if nuclear talks fail and “a conflict is imposed on us,” the Islamic Revolutionary Guard Corps “will target all U.S. bases in the host countries.”

A source familiar with the situation and a U.S. official told CBS News that the Trump administration was weighing options regarding how to support Israeli military action without leading it…
The source said the options are unlikely to include direct participation by U.S. B-2 bombers that carry the type of bombs that can penetrate Iran’s deep underground fortified uranium enrichment facilities at Fordow and Natanz. Without that type of strike, it is unlikely Israeli military action could destroy the underground portions of Iran’s program, and thus solo military action by Israel is presumed to be limited in its capability to fully eliminate the program. (CBS)

Conclusion

Israel won’t back down (I-W-B-D).

Israel faces an existential threat from a nuclear-armed Iran and will strike first in an attempt to eliminate the threat. The strikes may delay Iran’s uranium-enrichment program, but are unlikely to prevent the country’s leaders from pursuing their nuclear weapons goal.

The only way to eliminate the threat would be a full-scale invasion, which is likely beyond Israel’s capability. The US will offer support but is unlikely to become directly embroiled in the conflict unless attacked by Iran.

Oil prices are expected to spike due to supply concerns, while a flight to safety will likely boost gold demand.

Acknowledgments

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Eleven reasons for optimism in the next decade

This might seem more like a wish list than a forecast — there are always risks that can derail predictions — but we believe these are high probability events over the long-term.

Our timeline is flexible, some events may take longer than a decade while others could occur a lot sooner.

Also, some of the reasons for optimism present both a problem and an opportunity. It depends on which side of the trade you are on.

#1 US Politics

The political divide in the United States is expected to heal after neither President Biden nor his predecessor, and current GOP front-runner Donald Trump, make the ballot in 2024. The first due to concerns over his age and the latter due to legal woes and inability to garner support from the center. A younger, more moderate candidate from the right (Nikki Haley) or left (Gavin Newsom?) is likely to be elected in 2024 and lead the reconciliation process, allowing Congress to focus on long-term challenges rather than political grandstanding.

Nikki Haley
Gavin Newsom

Nikki Haley & Gavin Newsom – Wikipedia

#2 The Rise of Europe

Kaja Kallas

Prime Minister of Estonia, Kaja Kallas – Wikipedia

Europe is expected to rediscover its backbone, led by the example of Eastern European leaders who have long understood the existential threat posed by Russian encroachment. Increased funding and supply of arms to Ukraine will sustain their beleaguered ally. NATO will re-arm, securing its Eastern border but is unlikely to be drawn into a war with Russia.

#3 Decline of the Autocrats

We are past peak-autocrat — when Vladimir Putin announced Russia’s full-scale invasion of Ukraine on February 23, 2022.

Vladimir Putin

Vladimir Putin announces invasion of Ukraine – CNN

Russia

The Russian economy is likely to be drained by the on-going war in Ukraine, with drone attacks on energy infrastructure bleeding Russia’s economy. Demands on the civilian population are expected to rise as oil and gas revenues dwindle.

Fire at an oil storage depot in Klintsy, southern Russia

Fire at an oil storage depot in Klintsy, southern Russia after it was hit by a Ukrainian drone – BBC

China

The CCP’s tenuous hold on power faces three critical challenges. First, an ageing population fueled by the CPP’s disastrous one-child policy (1979-2015) and declining birth rates after the 2020 COVID pandemic — a reaction to totalitarian shutdowns for political ends.

China's birth rate

Second, is the middle-income trap. Failure to overcome the political challenges of redistributing income away from local governments, state-owned enterprises and existing elites will prevent the rise of a consumer economy driven by strong levels of consumption and lower savings by the broad population.

Third, the inevitable demise of autocratic regimes because of their rigidity and inability to adapt to a changing world. Autocratic leaders grow increasingly isolated in an information silo, where subordinates are afraid to convey bad news and instead tell leaders what they want to hear. Poor feedback and doubling down on past failures destroy morale and trust in leadership, leading to a dysfunctional economy.

Iran

Ayatollah Ali Khamenei

Iranian Ayatollah Ali Khamenei – Wikipedia

Demographics are likely to triumph in Iran, with the ageing religious conservatives losing power as their numbers dwindle. The rise of a more moderate, Westernized younger generation is expected to lead to the decline of Iranian-backed extremism and greater stability in the Middle East.

#4 High Inflation

The US federal government is likely to avoid default on its $34 trillion debt, using high inflation to shrink the debt in real terms and boost GDP at the same time.

US Debt to GDP

#5 Negative real interest rates

High inflation and rising nominal Treasury yields would threaten the ability of Treasury to service interest costs on outstanding debt without deficits spiraling out of control. The Fed will be forced to suppress interest rates to save the Treasury market, further fueling high inflation. Negative real interest rates will drive up prices of real assets.

#6 US Dollar

The US Dollar will decline as the US on-shores critical industries and the current account deficit shrinks. Manufacturing jobs are expected to rise as a result — through import substitution and increased exports.

US Current Account

#7 US Treasury Market

USTs are expected to decline as the global reserve asset, motivated by long-term negative real interest rates and shrinking current account deficits.

Foreign Holdings of US Treasuries

Central bank holdings of Gold and commodities are likely to increase as distrust of fiat currencies grows, with no obvious successor to US hegemony.

#7 Nuclear Power

Investment in nuclear power is expected to skyrocket as it is recognized as the only viable long-term alternative to base-load power generated by fossil fuels. Reactors will be primarily fueled by coated uranium fuels (TRISO) that remove the risk of a critical meltdown.

TRISO fuel particles

TRISO particles consist of a uranium, carbon and oxygen fuel kernel encapsulated by three layers of carbon- and ceramic-based materials that prevent the release of radioactive fission products – Energy.gov

Thorium salts are an alternative but the technology lags a long way behind uranium reactors. Nuclear fusion is a wild card, with accelerated development likely as AI is used to solve some of the remaining technological challenges.

#8 Artificial Intelligence (AI)

Scientific advances achieved with the use of AI are expected to be at the forefront in engineering and medicine, while broad productivity gains are likely as implementation of AI applications grows.

#9 Semiconductors

Demand for semiconductors and micro-processor is likely to grow as intelligent devices become the norm across everything from electric vehicles to houses, appliances and devices.

McKinsey projections of Semiconductor Demand

#10 Industrial Commodities

Demand for industrial commodities — lithium, copper, cobalt, graphite, battery-grade nickel, and rare earth elements like neodymium (used in high-power magnets) — are expected to skyrocket as the critical materials content of EVs and other sophisticated devices grows.

Expected supply shortfall by 2030:

Critical Materials - Expected Supply Shortage to achieve Net Zero by 2030

Prices will boom as demand grows, increases in supply necessitate higher marginal costs, and inflation soars.

#11 Stock Market Boom

Stocks are expected to boom, fueled by negative real interest rates, high inflation and productivity gains from AI and nuclear.



Conclusion

There is no cause for complacency — many challenges and pitfalls face developed economies. But we so often focus on the threats that it is easy to lose sight of the fact that the glass is more than half full.

Our long-term strategy is overweight on real assets — stocks, Gold, commodities and industrial real estate — and underweight long duration financial assets like USTs.

Acknowledgements

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Goldman Cuts 2017 Oil Price Forecast Due To Slower Market Rebalancing | Zero Hedge

Goldman Sachs has cut its long-term crude oil forecasts:

The inflection phase of the oil market continues to deliver its share of surprises, with low prices driving disruptions in Nigeria, higher output in Iran and better demand. With each of these shifts significant in magnitude, the oil market has gone from nearing storage saturation to being in deficit much earlier than we expected and we are pulling forward our price forecast, with 2Q/2H16 WTI now $45/bbl and $50/bbl. However, we expect that the return of some of these outages as well as higher Iran and Iraq production will more than offset lingering issues in Nigeria and our higher demand forecast. As a result, we now forecast a more gradual decline in inventories in 2H than previously and a return into surplus in 1Q17, with low-cost production continuing to grow in the New Oil Order. This leads us to lower our 2017 forecast with prices in 1Q17 at $45/bbl and only reaching $60/bbl by 4Q2017.

But these forecasts are premised on a Chinese recovery:

Stronger vehicle sales, activity and a bigger harvest are leading us to raise our Indian and Russia demand forecasts for the year. And while we are reducing our US and EU forecasts on the combination of weaker activity and higher prices than previously assumed, we are raising our China demand forecasts to reflect the expected support from the recent transient stimulus. Net, our 2016 oil demand growth forecast is now 1.4 mb/d, up from 1.2 mb/d previously. Our bias for strong demand growth since October 2014 leaves us seeing risks to this forecast as skewed to the upside although lesser fuel and crude burn for power generation in Brazil, Japan and likely Saudi are large headwinds this year.

While production growth continues to surprise:

…..This expectation for a return into surplus in 1Q17 is not dependent on a sharp price recovery beyond the $45-$55/bbl trading range that we now expect in 2016. First, it reflects our view that low-cost producers will continue to drive production growth in the New Oil Order – with growth driven by Saudi Arabia, Kuwait, Iran, the UAE and Russia. Second, non-OPEC producers had mostly budgeted such price levels and there remains a pipeline of already sanctioned non-OPEC projects. In fact, we see risks to our production forecasts as skewed to the upside as we remain conservative on Saudi’s ineluctable ramp up and Iran’s recovery.

We expect continued growth in low-cost producer output
Saudi Arabia, Kuwait, UAE, Iraq, Iran (crude) and Russia (oil) production (kb/d)

Tyler Durden has a more bearish view:

While there is much more in the full note, the bottom line is simple: near-term disruptions have led to a premature bounce in the price of oil, however as millions more in oil barrels come online (and as Chinese demand fades contrary to what Goldman believes), the next leg in oil will not be higher, but flat or lower, in what increasingly is shaping up to be a rerun of the summer of 2015.

Source: Goldman Cuts 2017 Oil Price Forecast Due To Slower Market Rebalancing | Zero Hedge

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Goldman Sachs Doubles Down On Lower-For-Longer Scenario | OilPrice.com

ZeroHedge quotes Goldman Sachs’ Jeffrey Currie:

….Not only will the macro forces keep prices under pressure, but historically markets trade near cash costs [near $50/bbl] until new incremental higher-cost capacity is needed (even the IEA has revised 2015 non-OPEC output growth from existing capacity up by 265 kb/d since March). In addition, low-cost OPEC producers are likely to expand capacity now that they have pushed output to near max utilization. At the same time Iran has the potential to add 200 to 400 kb/d of production in 2016 and with significant investment far greater low-cost volumes in 2017….

Read more at Goldman Sachs Doubles Down On Lower-For-Longer Scenario | OilPrice.com.

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What If Everything You Know About Terrorism Is Wrong? | The XX Committee

Great insight into the murky relationship between various government intelligence services and terrorist groups. This goes far beyond provision of weapons and money and includes founding and direction of some terrorist groups which act as covert arms of the intelligence service while providing the sponsoring state with “plausible deniability”.

…One happy by-product of the current American-led war on the Islamic State is that some people are now more willing to state that Iran does in fact possess ties to various terrorist groups, among them AQ and the Islamic State. Yet it’s still a struggle to get many people to see what’s obvious here.

Part of this willful disbelief is due to simple ignorance. Most “terrorism experts,” and virtually all of them possessing academic credentials, have exactly zero personal interaction with operational counterterrorism; therefore they are ignorant of the fact that many intelligence services — and all of them in the Middle East — play a wide range of operational games with terrorist groups, AQ very much included, encompassing everything from placing agents inside terror cells to actually creating terrorist fronts like Tawhid-Salam…..

The appearance of the Islamic State as a major force in Iraq and Syria, with threats of terrorist attacks on the West, has concentrated minds again to a degree. But unwillingness to ask difficult questions persists in many quarters. Despite the fact that we have more than circumstantial evidence that the Islamic State is being manipulated by Syrian intelligence, and Iran’s too, these notions are dismissed out of hand by too many Westerners who study terrorism. Yet if we want to defeat the Islamic State, it would be wise to actually understand it. That Washington, DC, continues its bipartisan blocking of release of the full 9/11 Commission Report, which includes troubling details of Saudi misconduct regarding Al-Qa’ida, is not an encouraging sign.

Read more at What If Everything You Know About Terrorism Is Wrong? | The XX Committee.

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Iran Didn’t Create ISIS. We Did | The Diplomat

From Ben Reynolds:

….No one is innocent in the Iraqi and Syrian civil wars, but Iran is not primarily responsible for the current state of affairs. The U.S. and its allies destabilized Iraq and Syria in turn, creating safe havens for extremists that previously did not exist. U.S. allies provided the material support that allowed ISIS and groups like it to become threats to the entire region, despite lacking any substantial popular base in Syria and Iraq. It is not unreasonable for Iran and Hezbollah to fight against these groups, which murder and enslave Shia and other religious minorities. Their actions conceivably fall under one of the West’s favorite principles of international law: the duty to protect.

Read more at Iran Didn’t Create ISIS; We Did | The Diplomat.

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