The Arab Spring arguably distracted markets' attention from the escalation of tensions between Iran and Israel. But recent bomb attempts, Israeli strike threats and Iran's nuclear posturing have served to move the issue firmly into the foreground.
Popular consensus seems to be that the probability of an attack on Iran is high - judging by the oil price, for example - while many reckon Western attempts at nuclear weapon prevention, let alone regime change, more generally, will inevitably fail.
Against this backdrop, here's the view from one Middle East analyst at a regional investment bank, who fears diplomacy is now dead. In short: bunkers at the ready.
In general, oil over $120 is the major drag (all time highs in Europe) and I see it going $130 before reversing into the summer quite dramatically.
To be honest, the Israeli strike is now at maximum probability range - look at it this way, if any of those bombings (whoever was behind them) had blown up an Israeli diplomat, what would be the probability of F16s not flying over Iraq right now? Impossible for diplomacy to work here.
From the price action at the start of the year, seeing dislocation into risk assets from starved pension fund managers, will need quite a shock to get them to reverse.. |
And here's Russia Today's take (click through for video):
Erm, have a nice weekend...