Crude Oil: $142 and Rising

The price of crude oil has risen more than $6 today, crushing another attempt at a stock market rally. Crude oil at $142/barrel is incompatible with strong equity markets.

The Iranian leadership has learned that they can manipulate the price of crude oil with a single sentence. By simply threatening to destroy Israel, they have learned that they can add $2-5 to the price of a barrel of oil within an hour. This adds billions of Dollars to their treasuries within a week or two.

With an economy in shambles and high unemployment, the leaders of Iran have realized that they can increase revenues easily and quickly by bellicose talk. If you were desperate to retain power and suppress your people, wouldn't you do the same?

Remember the taking of British soldiers as hostages, the buzzing of U.S. warships in International waters, the constant threats to Israel, the threats to shut down the Straight of Hormuz, and the recent missile test firings? All of these events have driven the price of oil substantially higher within minutes of these event reaching the news wires.

Here we go again!