Iranian Explosions: Implications And Impact On Oil

Contributing sentiments towards policy:

65% : As US NSC official Admiral Kirby noted in December: "Russia is offering Iran an unprecedented level of military and technical support that is transforming their relationship."
56% : Its disastrous invasion of Ukraine could however marginally reshape Russia's strategic calculus, making an alliance with Iran more palatable.
51% : Overnight, the sky over Iran was lit up by at least two explosions targeting military production facilities: one in Isfahan and one in Tabriz.
45% : The longer term implications of heightened "homeland" insecurity in Iran might well be a drive in Teheran to consolidate its alliances with Russia and China.
44% : The more Iran depends on Russia and China, the fewer diplomatic stepping stones are available to the West to present Iran with credible incentives not to develop a nuclear capability.
42% :Russian support for Iran in nuclear matters is likely more fraught, with Moscow remaining wary of providing Iran with obvious pathways to a nuclear break-out moment.
40% :Last week, the US, UK and EU imposed fresh sanctions on dozens of Iranian officials and are actively considering designating the Islamic Revolutionary Guard Corps a terrorist organization.
39% : 3/ Iran is a marginal producer (though admittedly the market is petty tight)
38% : Did warn you."While drones can be launched from any platform without much infrastructure, it is worth noting that the most common Iranian suicide drones have a range of roughly 2500km and the distance between Kherson, Ukraine, and Isfahan, Iran, is approximately 2600km -- so barely in tentative range.
38% : As Iran seems to be downplaying the attacks and no clear culprit has been identified (despite Ukraine's early response), any spike in oil prices could be driven initially by algorithmic trades immediately at the open and thus likely to fade as more information becomes available.
38% : With relations between the West and Iran at a low point, the future of the JCPOA remains unclear and in "the deep freeze," with all blocks satisfied that the nuclear status quo is acceptable (for now).
37% : Considering Iran is already suspected of providing material aid to Russia and the seeming determination by Teheran to minimize the explosions this morning, the risks of spill-over seem contained.
31% : At the start of the Asian open, oil markets might be primed to price higher risks to oil supplies out of concern that: (i) Ukraine war might be spilling over into Middle East, (ii) Iran might seek retaliation in the region, or (iii) general unrest in oil producing countries is bad news for supply.
29% : As we do not have a clear sense of responsibility for the explosions in Iran, it's too early to assume Iran is being targeted as a function of the War in Ukraine; other possible agents include domestic groups behind recent protests and, of course, Israel -- though the type of relatively unsophisticated and ineffectual strike makes direct Israeli involvement less likely.
22% : While the risk of direct involvement by Iran in the War in Ukraine does not present a central case scenario, elevated risks are present for Iran to seek to lash out regionally to emphasize its continued ability to project force (in the face of being hit domestically).

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