We’re now watching the price structure in energy related names as we feel Iran’s ambitions in the Middle East may develop into a flash-point to greater confrontation.
The standoff between Qatar and the rest of the Gulf Cooperation Council continues and should a conflict involving Iran occur, the risk to crude oil supply is significant.
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If there is a disruption of crude oil from Iran and Iraq, the oil market goes from balanced, which it is now, to a shortfall in supply.
The graph below illustrates the potential for demand to begin outpacing current production.
