Risk of Israel/U.S. strike on Iran has tripled: Barclays Capital
The chance of a military strike on Iran has roughly tripled in the past year, the senior geopolitical risk analyst at Barclays Capital said on Thursday.
New York-based analyst Helina Croft, writing in a note titled ‘Blowback: Assessing the fallout from the Iranian sanctions’, said even increased sanctions without an all-out military strike was increasing the risk of a spike in oil prices.
“We still contend that the risk of either an Israeli or US strike on the Iranian nuclear facilities remains low, but it has risen, in our view, from 5-10 percent last year to 25-30% now,” Croft said.
“In terms of supply-demand balances for the oil market, an oil embargo or sanctions on the Iranian central bank would essentially lead to a dislocation in trade flows, rather than lost outright production… However, the effect on oil prices could be significantly different.”
Croft said increased sanctions from the U.S. and European Union targeting Iran’s oil sector and central bank would likely, initially, have the primary effect of driving its oil exports east to Asia.
“If EU sanctions on Iranian oil were aimed at significantly reducing the flow of revenues to Tehran, they would perhaps seem no more likely to be successful than U.S. sanctions have been since 1988,” the note said.
“An inevitable knock-on effect of an EU embargo would be to push more Iranian oil eastward, without removing Iran’s ability to market all its crude available to export. In other words, the concentration of Iran’s buyers would increase, but the total volume would not be affected.”