Crispus Nyaga

Crispus Nyaga is a Nairobi-based trader and analyst. He started trading more than 7 years ago as a student. He has published in several reputable websites like The Street, Benzinga, and Seeking Alpha. He focuses mostly on G20 currencies, commodities like Crude oil and Gold, and European and American large-cap companies.

Crude oil is one of the most sensitive commodities in the world. The liquid is mined in most countries in the Middle East, a region that is not well-known for peace. This was evidence yesterday, when two large oil tankers were attacked. One tanker was attacked with torpedoes while the other one was repeatedly attacked but none of the tankers was at risk of sinking.

The attack on the tankers, one of which was Japanese, came shortly after Japan’s Shinzo Abe met with Iran’s leader, Hussein Khamenei. In a statement by the US Secretary of the State, the US blamed Iran for the attacks but he provided no evidence. He said:

Taken as a whole, these unprovoked attacks present a clear threat to international peace and security, a blatant assault on the freedom of navigation, and an unacceptable campaign of escalating tensions with Iran.

In response, Iran denied responsibility of the attacks. In a statement, the country’s foreign minister, Javad Zarif, said that the country was not responsible for the attacks. He warned the region not to fall into a trap caused by external actors. By this, he was blaming countries like the United States for provoking tensions in the region.

Tensions in the Middle East, particularly at the Strait of Hormuz would be tragic to the world economy. This is because two-thirds of all oil transported in the sea passes through these waters. In fact, after the reports of the attack, the price of crude oil rose sharply as investors studied the implications.

The current tensions between United States and Iran started after Donald Trump abandoned the Iran nuclear deal, which was signed during the Obama era. The administration went against the liking of the advice of leading security experts and American allies like Europe and Japan. It also left the deal despite the fact that Iran was complying with the deal.

As the tensions with Iran have increased, Donald Trump has continued to believe that he can negotiate a better deal than the one that was negotiated by Obama. Iran on the other hand has vowed that it won’t negotiate with the United States. As these tensions have increased, some in the Trump administration have called for a US attack on the country. However, Trump has rejected this advice because of the risks of starting a new war.

In the coming days, the price of crude oil will likely be in the spotlight as these tensions rise. In addition, OPEC is expected to meet in the coming days to deliberate on the future of the supply cuts. Recent reports suggest that OPEC+ members will accept to extend the supply cuts with the goal of supporting the price of crude oil. The chart below shows the performance of Brent and WTI crude oil after the attack.

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