there are consistant rallies when 100 - 200 thousand barrels lost. 2$ an average 3.75% equals 3.5 million barrels. It's huge it's like half of saudi arabia production. Importing from Iran can be suspended indefinetily and we can bomb them as much as we want and prices still will in 40s
Hi kashirin, If you're saying only that a one-day *unanticipated* cut in demand of 3.5 million barrels would send the market into a nosedive, I'd be a fool to argue. I was just pointing out that in a realistic scenario (although how realistic it is to postulate that America might impose such a tax... well ..) where the market perceives this happening over a period of months, it would only offer relief. The lower prices would bring back some of the demand that's already been destroyed in the developing world, and probably accelerate demand growth in Asia. Who would suspend imports from Iran? The US is not a customer of Iranian oil. One more thing, I don't think increasing the price by even 50% (top of my head number) would really drastically reduce US demand. One key number I suppose is what proportion of disposable income of the average US citizen goes on gasoline .. it's far, far smaller than almost any other country, I'm sure, except maybe Saudi Arabia or Venezuela. Hasn't gasoline already gone up 50-100%? (Correct me if I'm wrong, I don't live in the US). And compare that proportion of disposable income increasing marginally with the losses incurred if people stop driving to work in a country with weak or no public transport infrastucture. I think the US citizens will just suck up any reasonable sized increase in price. Anyway, this is all a bit hand-wavy but you get my point - lots of uproom on price.