Oil popped 3 percent and is making new highs, even as the tactical asset managers dumped commodities en masse in the past 2 weeks.
Judging from the pattern of leaks, it seems that the entire US security establishment to the right of State (from the very moderate CIA all the way to Petraeus) has agreed upon an Iran airstrike. Maybe oil is reflecting this; Iran has called off all negotiations while the US throttles its Sadrite proxies, all the leaks have been made in all the right places, and the more “dovish” American officers have at the same time said that they really, really don’t want a full-blown war with Iran, to “contain” an escalation’s impact upon commodities markets as much as possible.
The groundwork has been laid several times before, including February/March 2007, and later in August-November 2007, although strategic leaks and minor Iranian concessions stalled it each time.
I have been arguing for a long time that Iran is simply stalling for time until after the 2008 elections, and that its various stop-start negotiations and concessions are not in good faith. It seems like most of the US security establishment has arrived at such a consensus.
Israel is the only problem; Olmert has basically pawned Israel’s longer-run strategic interest. Ratcheting up the pressure on Ahmadinejad would be a great way to screw Olmert, as well as serving the US interest in Iraq.
By the way … I still think it’s a great time to buy gold miners (if you ignored me when I said to buy while gold was at $1020, then $920, and now $870)