🛢️🔺Crude Oil Risks Spiking Higher On U.S. Strikes: Cable FX Macro

• Another day of crude oil volatility is registered on Monday open after the U.S. attacked Iranian nuclear facilities. Crude oil futures have risen 23.7% over the last month as Israel and Iran clashed, and geopolitical risk premiums were priced in.

• I will brief you with the two main scenarios I have heard the most from analyst chatter. First, if Iran is bluffing and willing to negotiate, crude futures are expected to fall back to pre-war levels or back to the mid-$60s. The second main scenario is a range of calls on crude oil moving higher, from $100 to $130, the most extreme scenario should be if Iran proxies move to shut oil flows moving through the Strait of Hormuz.

• It is too early to assess the damage from the U.S. strikes on Iran nuclear infrastructure, and a formal Iran response has not been issues. However, Iran continues to launch missiles towards Israel, the most likely scenario is for tensions to build up.

• As a reminder, a third of global seaborne oil trade moves through the Strait of Hormuz. In the scenario where these flows are compromised, J.P. Morgan analysts warned U.S. CPI rising to 5%.