AbsoluteWealth.com Editor Predicts “Devastating Economic Consequences” of a Nuclear Iran

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Options traders are betting on a sharp increase in oil prices over the next year, on fears of war in the Persian Gulf, according to data from the New York Mercantile Exchange, announced James R. Gorrie, managing editor of Absolute Wealth, an Austin, Texas-based online news and commentary portal. The report comes after the United Nations released their November 8th report on Iran’s nuclear program. Traders have been piling into call options maturing in December of 2012, betting that oil will be selling at $150 or more at that time. This call option has become the number one-selling option on the Nymex, according to exchange officials. Earlier this year, Gorrie had predicted that war with Iran could cause crude oil spot prices to soar to over $20 per barrel.

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Forty percent of the world’s oil is shipped through the Straits of Hormuz. Iran will gain great power and wealth by controlling the Straits of Hormuz.

A United Nations report on Iranian progress toward developing a nuclear weapon, released last November, has caused demand for oil futures to soar, according to James R. Gorrie, editor-in-chief of AbsoluteWealth.com, an Austin, Texas-based online news and commentary portal for investors. The November 8th report raised the specter of war between the Islamist Iranian government and the West, including the possibility that an Israeli strike against the Iranian weapons plants could lead to a wider war in the region.

On the other hand, if Iran does successfully develop nuclear weapons, according to Gorrie’s prescient article of last July, it is likely to use that leverage over its neighbors to extort a toll on oil passing through the Persian Gulf on its way to the West.

“Forty percent of the world’s oil is shipped through the Straits of Hormuz. Iran will gain great power and wealth by controlling the Straits of Hormuz,” Gorrie wrote last summer. “It will control the flow oil by nuclear threats against those who ship oil through the straits, will set the price of oil, and take a large cut of every barrel of oil.”

Gorrie also predicted a number of possible follow-on effects that would be “devastating” to U.S. interests, including the possibility of the overthrow of Sunni and secular governments throughout the Middle East. Iran could also insist on alternate currencies, such as gold or Swiss francs, as the unit of exchange for oil, undermining the value of the dollar and its status as a global reserve currency. Ultimately, Iran could choose to arm Venezuela and Cuba with nuclear weapons.
The recent surge in call options – the right buy oil at a set price in December of next year – reflects worried traders around the world seeking to hedge their bets by locking in $150 per barrel prices through next year, in order to protect themselves from the severe oil shock that a nuclear Iran could create.

About James R. Gorrie:
James R. Gorrie spent over eighteen years in financial services as an industry recognized investment financial advisor, advising clients on investment planning, trusts, business succession planning, financial products and market conditions. As a registered investment advisor, his clients have included a former presidential economic advisor, educators and business owners, and high net worth individuals. James holds a BA in economics, and attained doctoral candidacy in international relations and comparative politics, with an area specialty in international political economy, before entering into the private sector. As Managing Editor of Absolute Wealth and The Empire Report with George Ross, James writes daily articles on current macroeconomic and investment topics, special reports, and analyses on geopolitical events around the world that effect the market.

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