Iran Nuclear Program And Potential Consequences For The Markets

Although this in not a blog on politics this particular situation could have enormous impact on markets. Iran and it’s nuclear ambitions and the further developments could pose a future large shock to the markets and unfortunately I think, time wise, something could happen very fast. Maybe early as next year.

Nice outline of the situation by Oliver Debouzy in yesterdays WSJ: How to Stop Iran.

…This week’s revelations about Iran’s recent work on warhead design underscore the point. No country has ever gone so far along the road toward the acquisition of a nuclear military capability without actually…

…Politically, no Israeli prime minister could survive the fact that Iran became a nuclear-armed state, officially or unofficially, on his watch. The pressure on the Israeli government to do something to counter Iran’s acquisition of nuclear weapons would be so strong that it could well be tempted to play a desperate gamble, regardless of any security guaranties that the U.S. might offer….

…Similarly, no U.S. president (especially one endowed with a Nobel Prize) could escape blame for having let Iran become a nuclear-weapon state by consistently underestimating its ability to conceal its preparations. The intelligence community’s credibility would be devastated, and the indecision by successive administrations (Clinton, Bush and now Obama) to quash a program that has been suspected for 15 years and openly known for seven would be seen as a failure of major proportions….

…The time for diplomacy has passed. Iran must cave in, and quickly. If the West is not prepared to force it to comply with its commitments under the Nuclear Non-Proliferation Treaty, this in effect means that the treaty is dead and that the Gulf countries are being abandoned—stealthily, but nonetheless very definitely. It also means that the non-proliferation regime is, for all practical purposes, dead. Is this really what we want?

Personally my view is that Israel will bomb Iranian nuclear sites at the moment when Iranian program reaches the point at which it will be highly probable that Iran has both production and technological capabilities to produce a nuclear warhead.

In case of an Israeli attack first thing that will move violently is crude oil, if crisis doesn’t end fast we could well see new all time heights. U.S. dollar rise would cause carry trades unwinds. Stocks would be under additional pressure from the high oil price… A real mess…


This entry was posted on Thursday, December 17th, 2009 at 4:31 pm and is filed under Commodities, Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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