Without question, if I knew that a disruption of oil supplies from Iran would occur, I’d bet the farm on a dramatic rise in crude oil prices. But how rationale is this popular consensus opinion? I quote from Daniel Yergins, The Quest: Energy, Security, and the Remaking of the Modern World.
“Currently, IEA nations have about 1.5 billion barrels of public stocks, of which about 700 million barrels are in the U.S. Strategic Petroleum Reserve. Were Iranian exports to disappear from the market, the 1.5 billion could compensate for the shortfall for more than two years.”
So rationale expectations and making money in the markets are two very different ideas. In the short-term, emotion and perception are everything but in the longer term, rationale expectations will rule out. The question for the investor is when do the two conflicting ideas collide.