Roubini strategist says talks with Iran will not succeed

Roubini Global Economics reported that the scheduled meeting this month regarding Iran’s planned nuclear weapons development could prove to be unproductive.

Roubini strategist Gary Clark says that even if Iran seems to have refrained from issuing strong statements in defense of its nuclear program, and looks ready to discuss it, this “cooling off” is going to be short-lived.

Succeeding discussion on the subject is due on May 23, and Clark predicts nothing successful will come out of it. He foresees that Iran will not agree to Israel’s bid for the former to curtail its nuclear program and demolish the Qom nuclear plant.

Clark stated further that “The possibility — albeit small — of a military strike remains on the table which equates to a large, if not rising, risk premium built into current crude oil prices.”

Global Head of Oil Research for Societe Generale, Micheal Wittner, also shared the same opinion, and added that even if a preliminary agreement is reached, the sanctions may have to remain for sometime and this, he said, is the reason why a bullish market is seen ahead.

Based on studies conducted by Economist Intelligence Unit, the rise in crude prices, partly due to nuclear issues with Iran, will put a dent on global recovery.

In a worst-case scenario, i.e. if Israel launches a military attack targeted at Iran’s nuclear plants, the crude oil price per barrel is predicted to grow by a staggering 50%, threatening another round of global recession.

On the brighter side, Senior Analyst of Normura International, Alastair Newton, believes that a military strike against Iran would be unlikely.

Newton observed that former CS of the Israeli Defense Force (IDF) Shaul Mofaz had, in some instances, stated doubts about any military intervention. The same sentiment was expressed by current intelligence officers, including no less than the incumbent IDF chief of staff, Gen. Benny Gantz.

Gantz said that Iran is led by sensible leaders, and further expressed doubts about the country’s alleged nuclear program. Newton interprets this line of thinking as evidence that Israel is trying to mitigate geopolitical conflict were Iran is concerned and this, he says, may ease possible hikes in crude oil prices.

Analyst Riccardo Fabiani disclosed that an Israeli military attack against Iran in 2012 is nearly impossible, as only a full-blown nuclear program could spark such a move.