He said that Iran needs petrodollars more than the world needs its oil, something that would prevent actual conflict. A lack of refining capacity also means that Iran would essentially cut off its own oil supply for domestic use.
“What Iran does not need is to drive oil prices to a level where we see economic contraction around the globe, and demand destruction accelerates pushing oil significantly lower,” he said.
Schork said he was bearish on oil, largely on relatively weak global demand.
“If you look at Asia, which is where all the demand for oil is supposed to come from, if you look at the way those indices are playing right now, they have completely decoupled from what we’re seeing in the S&P right now, and the correlation is almost zero,” he said.
Schork said he saw NYMEX trending toward the high $80 to low $90 range and would be a buyer there.
“Below there, you’re going to have to see a major economic contraction,” he added.
Light crude traded around $99.50, down 1.8 percent, while Brent crude was in the $107 range, down almost 2 percent midday.
MercBloc President Dan Dicker said a price dip presented an opportunity.
“I think on these down days, after you’ve had a technical pull-back from such high levels — over $100 in the TI and over $109 in the Brent — you should take advantage of those and take a look at some oil stocks,” he said.
Dicker also offered an oil play.
“Apache is the best value in this space. I wrote whole a book claiming that you’re going to get basically a higher high every year going forward, so I’ve got to push back on all of this,” he said. “I think you see $120 WTI sometime in 2012.”
Trader Steve Cortes said he shorted oil just like he did last time Tehran made such comments.
“Unfortunately, I didn’t trade it right. I had a lot of profit and didn’t take it,” he said.
Cortes also agrees with Dicker in that Iran’s tough talk likely won’t mean a military conflagration.
“Oil has no business above $100,” he said, citing a cyclical downturn in global demand. “It’s only because of geopolitical worries.”
“Fast Money” pro Pete Najarian sounded bullish on integrated oil names, specifically ConocoPhillips, which he called undervalued. The company, which traded below $72 per share midday, is heading for a split-up next year.
“I think it’s way too cheap at this point,” he said.
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Trader disclosure: On Dec. 28, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian is long AAPL; Najarian is long C; Najarian is long HPQ; Najarian is long MT; Najarian is long PFE; Najarian is long LLY; Najarian is long MRK; Najarian is long MSFT; Najarian is long YHOO; Cortes is long K; Cortes is short EUR; Cortes is short GBP; Cortes is short Crude; Cortes is short Gold; Cortes is short XRT; Cortes is short IYT; Cortes is short CSX; Dicker owns GM; Dicker owns RIG; Dicker owns NBL
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