Persian Gulf Simmering Could Boil Oil

Just a quick note from vacation on the situation in Iran. Consistent with a prior note, we've been short oil, long gold, and bullish the US dollar.

A lot of that has been based on a presumption of over supply in oil and some kind of positive conclusion to talks in Iran. Iran's announcement of 10 new facilities was greeted by the French as "infantile".

It has become clear that confrontation right up to the bring is at least somewhat in the current regime's interest. It allows them to quell internal dissent and paint any criticism as pro British or American. Perhaps more importantly, it keeps oil prices higher than they otherwise would while the Revolutionary Guard does what it can to start trouble.

Could be a nice spike up in oil if the rhetoric escalates out of Washington, Paris and London and one should be prepared for that no matter what the long term view is.