Watch early oil trading Sunday evening, because Iran once again refused to even negotiate the future of its nuclear uranium enrichment program. Some of the erosion of crude oil prices in the past few days was due to the rumor that Iran was showing a willingness to negotiate and end to their nuclear ambitions. Those hopes have now been dashed. Watch crude oil trading early next week. It may reflect the disappointment of this news.
To be honest, this news doesn't surprise me. Iran has a poor economy, with high unemployment, costly social services, and high inflation. Crude oil revenues are the primary shield of protection from the Iranian regime's collapse (the same is also true of Hugo Chavez). The leaders of Iran have learned that the best way to add a few billion Dollars to their treasury over the next few weeks is to talk of war, mayhem, terrorism, and bloodshed. It is a cheap price to pay. They exchange a few bellicose words, and the world compensates them with billions of Dollars in higher crude oil revenues within days. Where's the motive to consider any change?
To be honest, this news doesn't surprise me. Iran has a poor economy, with high unemployment, costly social services, and high inflation. Crude oil revenues are the primary shield of protection from the Iranian regime's collapse (the same is also true of Hugo Chavez). The leaders of Iran have learned that the best way to add a few billion Dollars to their treasury over the next few weeks is to talk of war, mayhem, terrorism, and bloodshed. It is a cheap price to pay. They exchange a few bellicose words, and the world compensates them with billions of Dollars in higher crude oil revenues within days. Where's the motive to consider any change?
