An Oil Premium

Right now some would say the geopolitical risk premium in crude oil is minus zero dollars.  Such mass abandon usually occurs just at the WRONG time.

Iran Threatens to Close Strait of Hormuz If Attacked

Following recent threats by Iranian government elites, [1] in the past several days senior Iranian officials have emphasized that if it is attacked, Iran intends to close the Strait of Hormuz, thereby impeding the export of oil from the Gulf to the rest of the world.

The following are statements on this matter by several senior Islamic Revolutionary Guards Corps (IRGC) officials:

IRGC Political Bureau ChiefJavani: Closing the Strait of Hormuz is Part of Iran’s Defense Policy

In an editorial titled “When Will the Hormuz Strait Be Closed?” in the Iranian weekly Sobh-e Sadeq, which is the mouthpiece of Iranian Supreme Leader ‘Ali Khamenei circulated among the IRGC, IRGC political bureau chief Yadollah Javani wrote:

“The Strait of Hormuz is one of 14 locations in the world with unique strategic importance. Over 60 percent of the world’s energy reserves are located in the Persian Gulf, and 17 million barrels of oil are transported daily from the strait by oil tankers. In today’s global economy, oil plays the same role as blood in the human body, and under present circumstances, it is impossible to conceive of an active and dynamic economy without oil. Industry is completely dependent on [Persian] Gulf oil for survival.  More…