Iran, China and Crude.
Note that China is already the largest buyer or Iranian oil. If Iran defies the sanctions, it will mean they need to sell more oil to Asia. But does China, in particular, want to increase their dependence on Iranian oil as their domestic consumption slumps. If they want to be a major world player, they may look at this a bit more diplomatically and think twice about increased business with Iran in the face of new, tougher sanctions. [Remember: US Treasury Secretary Timothy Geithner went to Beijing this week to discuss China’s relationship with Iran, among other things.]
So even if Iran is able to sell more oil to China and Asia, it’ll likely mean they sell that oil at a significant discount; or they sell less of it because China’s growth slump equates to less demand. Either way, it seems like revenues from Iranian oil exports are bound to shrink. I’m not sure they can handle that. All together this could mean some of the geopolitical premium could escape from the current price of oil. But …
No new recommendations or adjustments at this time.