February 07 2020
PLUNGE – The bottom has suddenly dropped out of the oil market. An OPEC barrel topped $70 for one day on January 6, which was three days after the assassination of Maj. Gen. Qassem Soleymani while the world awaited Iran’s response. The market clearly was not impressed by that response as the OPEC price has since plummeted 17 percent. At $58.80 on January 30, the price was back below $60 for the first time since last summer. Normally, whenever the Middle East sees something militarily dramatic, the price of oil surges. But that has ceased this passed year. When Iran attacked Saudi oil installations in September and when the US killed Soleymani, the price jumped for just two days both times and then fell below where it had been before the event. Iran retaliated for the Soleymani assassination on January 8. The price fell that day and on each of the successive six days for a total of 6.2 percent. The Islamic Republic appears to have lost its ability to impact the market and is no longer able to boost oil revenues by doing something dramatic.