What If? On Oil, Iran And Nuclear Strike: PIMCO

Viewpoints from PIMCO portfolio manager Greg E. Sharenow attached: Playing ‘What If?’ with Oil Prices and a Potential Strike on Iranian Nuclear Facilities

The impact of a major disruption in the supply of oil from Iran would depend on the IEA’s possible intervention, the duration of any interruption and the degree to which any attack might catch the markets by surprise.

The market has less 'cushion' than it did earlier this year due to significant production outages and relatively strong non-OECD demand, leading to sharp draws on inventories.

Excess capacity is virtually exhausted and we doubt other OPEC nations would be able to compensate for a reduction in Iranian oil production.

In light of these possible oil price spikes, investors should evaluate how their portfolios might be affected by a sudden or sharp burst of inflation.