As of 12 noon New York time U.S. crude benchmark West Texas Intermediate was off 0.28% but still holding above $60.25 a barrel. International benchmark Brent was off 0.72% but was still holding above $65 at $66.39 a barrel.
Prices above $60 are a reflection of market worries that protests in Iran that started with a call for more economic growth and better jobs have expanded into an attack on the religious leaders that underpin Iran’s government. Certainly the protests have spread from the urban elites to some rural populations that have, historically, provided the strongest support for the Ayatollah Ali Khamenei, the supreme leader of the Islamic Republic. And certainly the confrontation has become increasingly violent. The Guardian is reporting that 21 people have been killed in the protests.
But there are no signs of any defections, so far, from the Republican Guard and other security forces that provide the regime with its repressive muscle. In fact, over the last day rhetoric from security forces has gotten even more extreme with promises to crush the protests with extreme armed force and warnings that those arrested in the demonstrations face the death penalty under Iranian law.
I expect that the protests will keep the oil market on edge, but I don’t see them having the actual effect on Iran’s oil exports that would be necessary to create a spike in oil prices from current levels. On the other side of the equation, continued weakness in the U.S. dollar will continue to support oil prices above $60.