Oil is surging. I sure regret selling my oil stocks.
The current price clearly represents a risk premium associated with the British soldiers being held by Iran. The worst case scenario (or best case from the perspective of investors long oil) is that a war with Iran results in Iran cutting off oil supplies from the Persian Gulf, which would cause an unprecedented spike in oil prices. I’m not the only person who knows about this worst case scenario. It’s factored into the current price.
Holding these sailors hostage is a pretty dumb diplomatic move. If Iran’s goal is to obtain nuclear weapons, Iran ought to be laying low until such weapons are finally ready. Then Iran can act all belligerent and say, “Ha ha, we have nuclear weapons, what are you gong to do about it?”
It also doesn’t make sense to piss off the British. When Argentina pissed them off by taking over the Falkland Islands, they went to war against them.
The most likely resolution is that Iran will give the sailors back, there will be no cutoff of oil, and prices will retreat.