Iran, Israel, and Oil: The Middle East Conflagration Looks Set To Get a Lot Worse.
Contributed Opinion

1. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found  below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

2. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

Back in the middle of April, we had detected strong Accumulation in the oil sector, when, in the article SOMETHING BIG GOING ON IN OIL, it was written, "But what could cause a big rally in oil? — after all, the world economy is imploding, is it not, made worse by the tariff war? While this is pure speculation on my part, the only thing I can think of is an attack on Iran."

Well, it took rather longer than expected, but that is what has started in recent days.

In seeking to understand why Israel and the U.S. would attack Iran at this time, it is crucial to understand one key point, which is that Israel and the U.S. are actually one and the same entity, controlled by the same people which is clearly evidenced by the fact that any UN resolution against Israel is automatically vetoed by the U.S. So, bearing this in mind, and keeping this short because our main objective is to predict what is likely to happen to the oil price, not dwell on the geopolitics, let's list why Israel and the U.S. would want to attack Iran.

• Israel and the U.S. are the natural enemies of the Arab world and have already amply demonstrated this by their actions — the only reason that they haven't (yet) attacked Qatar, Oman, Saudi Arabia and the UAE is that they are compliant and servile vassal States who have been essentially "bought off." Their aim is to dominate the entire Middle East — they have already neutered or subjugated Egypt, Iraq, Jordan, Lebanon, Libya, and Syria, and the only country standing in the way of their total hegemony is Iran. Israel is known to want to expand its borders greatly, "from the Euphrates to the Nile."
• Israel and the U.S. have a tendency to view rivals not just as rivals, but as enemies who are to be dominated and, if deemed necessary, destroyed. Over the past couple of decades, China has grown in strength to the point that by the end of the last decade, it was becoming a serious rival to the U.S. It therefore had to be dealt with. China was seriously weakened by the COVID-19 crisis, with lockdowns that did tremendous economic damage. Then this year we have had the tariffs, which were "smokescreened" by tariffs being imposed on almost every country, but the real intent was to inflict heavy damage on China, which was subject to the most extreme tariffs — again to destroy it economically. This has created chaos and mass unemployment in China, with Banks now brazenly and effectively appropriating their account holders' money — and we can expect to see this sort of thing spread across the world as the crisis deepens. 
• One reason that Europe and the U.S. are working to destroy Russia through their Ukraine proxy is that Russia is rich in natural resources, while Europe has virtually none. They covet these resources, and destroying Russia will be a flanking move that will leave China relatively isolated. Unfortunately for them, this war is not exactly going well for them, so it looks like it won't be long before Zelensky will be making a getaway.
• The United States is a big producer of oil, China hardly produces any, and is heavily dependent on imports from the Middle East and especially from Iran. Therefore, a good way to cripple it economically is to cut off its supplies of oil from Iran by, for example, bombing Iranian oil fields or provoking them into blocking the Straits of Hormuz, through which 20% of the world's oil flows and there is now talk of this happening. Now, you might say, wouldn't they (Israel and the U.S.) be "shooting themselves in the foot" by doing this? After all, if the price of oil skyrockets due to this disruption, it will cause economic problems and worse inflation in all countries. There are two points to make regarding this. Firstly, a collapsing economy and higher prices, especially for oil, only affects ordinary everyday people; the very wealthy and don't care if their economies collapse or poor people starve — in fact they find it kind of funny especially as they think that there are too many ordinary people around. Secondly, countries like those in Europe, Israel, and the U.S. might be adversely affected by much higher oil prices, but China will be much more severely impacted, so to their mind, this makes the higher oil prices worthwhile. 
• The world economy is on the verge of collapse due to astronomical levels of debt, with debt creation having gone into the ultimate terminal vertical blowoff phase. Wars provide a convenient excuse to create even more money out of thin air in order to kick the can a little further down the road and to implement draconian societal controls, such as enacted during COVID-19. 

So, there you have solid reasons for attacking Iran. 

Having thus established that those who started this war are perfectly happy to see oil prices go through the roof, let's now review the latest charts, using a reliable proxy for oil (since the crude oil charts in Stockcharts no longer show volume). The proxy we are using is the United States Oil Fund (code USO).

The first point to make is that there was a sizable body of insiders who knew that this war was in the works a couple of months ago and were betting on it, which is kind of sinister when you think about it. We spotted their Accumulation at the time, hence the article SOMETHING BIG GOING ON IN OIL mentioned at the start of this article.

After it was posted, late in April and early in May, the price retraced to form a Double Bottom with the early April low as we can see on the latest 6-month chart for USO below. However, it only broke out above the resistance at the upper boundary of what turned out to be a base pattern just over a week ago. Then, when the missiles started flying, the price gapped higher on Friday on massive volume, the biggest for more than five years, a very bullish development which implies that the oil price could be headed much higher.

On the longer-term 6-year chart, it is rather surprising to see, in the light of the latest developments, that the price still hasn't broken out of the giant rectangular trading range that it has been stuck in since early–mid 2022, so for three years now.

However, that doesn't mean that it won't — the gap higher Friday on huge volume implies that it probably will break out upside and soon, and if Iran proceeds to block the Straits of Hormuz, a growing probability, then the oil price could skyrocket.