Iran's Impact on Oil in One Word: Turbulence
As news and rumors of Iranian belligerence boil, trader Ira Eckstein isn't surprised that oil prices swung broadly Thursday. He and Kenneth Timmerman, Middle East Data Project president, told "Power Lunch" viewers what to expect from petroleum -- and from Iran.
Eckstein, of Area International Trading, said that the market "tends to overreact" to any news -- such as reports that the USS Nimitz carrier strike group will steam to the Persian Gulf Monday. Oil prices climbed to more than $66, sank back below that mark, and finally closed at $66.03.
The trader saw "good volume" Thursday afternoon, and thinks it can go higher. And Eckstein believes that even if Tehran releases its British naval detainees, oil will still hold at $60 -- because of non-political factors such as the looming gasoline season. But if Iran is taken off the market, he foresees a huge spike.
Timmerman declared that "the only thing that matters" to Iranian President Mahmoud Ahmadinejad is power -- and that the Islamic fundamentalist leader believes he's in a "strong position" to muscle the U.K. and U.S. into easing their criticisms of his regime. But Timmerman pointed to the "Divest Terror" bill passed Wednesday by the California assembly as an example of how Western investors can "give a lesson" to Tehran by yanking investments. What is the most likely scenario? The political analyst said to look out for Iranians splitting up the detainees into separate areas -- as they did in 1980 -- signaling a "long crisis."