Hi Sean: I was wondering what your thoughts are on the Iran situation and the price of oil. Companies such as DO and USO have risen quite a bit over the last week. I sold USO, but have retained DO. Its done quite a hike upwards since Tuesday.

What happens in Iran never factors into my system. Why? Maybe they strike a new deal. Maybe they don't. Oil is in an uptrend and an Iran deal or no Iran deal isn't likely to reverse that uptrend. However, oil will likely have sizable percentage pullbacks along the way.

Also, the timing and what each individual importer does would only further complicate the matter and provide more unknowns. For instance: the sanctions on petroleum-related transactions and those involving Iran’s energy sector will be reimposed following a 180-day “wind down period which ends November 4, 2018” (although importers are encouraged to reduce uptake volumes in the interim).

It's why I stick to things that are measurable and don't worry about news events which can't be fully measured/quantified all that easily.

Ok. Thank you. I was wondering in the short term, if thats what had caused the steep upturn ? [Also, for me, the exchange rate changes things all the time]

No. The overall pick-up in inflation, the decline of the dollar over the past year, etc. has had more to do with oil's ascent from $26 to $71 more than anything.

But since Tuesday DO (for example) has risen $2 [$18- $20 is over 10% in just 2 days]. The charts of the other oil companies look similar. I was just wondering from a geopolitical point of view.

Yes, the news events can help stoke near-term rallies. No doubt. But with oil peaking its head up above $70 is a big deal for these deep sea drillers. That likely helps the most.

Makes sense. Thank you :)


You're welcome.