Following US strikes on Iranian nuclear sites, oil prices briefly spiked but returned to pre-strike levels, reflecting market resilience. President Trump's threats of 'regime change' did not scare investors, as they recognize Iran's limited options for retaliating against oil demand. With the Strait of Hormuz crucial for global oil transit and Iran's own financial dependence on oil revenues, closing it would harm Iran more. The calm market seen through falling VIX volatility and rising S&P futures affirms this sentiment, suggesting optimism in the face of geopolitical unrest.
Because Iran's options in terms of screwing up the oil market are actually quite limited.
Historical patterns show that Iran has never blocked the shipping route in its five-decades of existence.
The predominant buyer of Iranian oil is China, which is an ally of Tehran.
Investors are unconcerned about major oil disruptions, reasoning that Iran is unlikely to close the Strait of Hormuz.
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