Unprecedented circumstances can lead to desperation.
The US oil industry is in serious crisis because of Coronavirus. And a spooked President Donald Trump is throwing everything at the situation.
Trump's tweet that he has instructed the US military to destroy any Iranian naval vessel that harasses US ships in Gulf waters has given oil prices a boost as US-Iranian tensions increase.
Not to be outdone by Trump, the Iranians have issued a warning of their own, with the commander of the Iranian Revolutionary Guards Corps (IRGC) Major General Hossain Salami stating that Iran will protect its interests and target US vessels.
However, it seems that the real interests for both sides, apart from who bosses the waters of the Persian Gulf, are oil prices. The US and Iran have a lot to gain from higher oil prices.
And the sabre-rattling appears to have done the trick. US oil had fallen into negative territory for the first time in history, and Brent crude which had also fallen to a two-decade low, were given a boost by the belligerent exchanges.
US oil prices increased by 20 per cent a barrel, while the global benchmark Brent oil gained 8.6 per cent. This is a tactic that works a treat every time it is used. If you want to see higher oil prices then raise the geopolitical temperature because any regional conflict could disrupt to oil shipments from the Persian Gulf, which account for 31 per cent of global shipments. In this presidential election year, Trump desperately wants to revive the US oil industry, which has around 9 million jobs. Iran is in no position to start a major conflict with the US, especially at a time that it is struggling to contain the impact of the coronavirus on the country, and with an economy that is in free fall because of US sanctions. However, the Iranians recognize the part they need to play in supporting oil prices and have duly obliged by threatening to target US ships in the region.
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