Oil prices swing as unrest in Iran reaches fever pitch
Protests rocked Iran Wednesday as the value of the country's currency continued its free fall. Uncertainty in the region has meant an up and down week for oil prices.
In this August 2012 file photo, a police colonel talks with a group of Iranian workers during their protest in front of the Industrial Ministry building in Tehran. Unrest in the region over devalued currency has sent oil prices fluctuating wildly.
AP/File
Unrest in Iran reached a fever pitch Wednesday as the Islamic Republic's currency continued to plummet in value.
In Tehran, protestors clashed with riot police as hundreds marched against the rapid devaluing of the country's currency, the New York Times reported. The rial saw a 40 percent drop in value over the past week, and rising food prices have forced some in the country's middle class to start stockpiling food.
The protests exacerbate the economic tightening that has resulted from sanctions on Iran. Internationally, the unrest has sent oil prices yo-yo-ing as traders watch the volatile, oil-producing giant with uncertain eyes.
Pressure on President Mahmoud Ahmadinejad continues to mount. Whispers of a regime change are afoot, prompting some to make optimistic forecasts for the global oil market.
“A new regime would probably pump a lot of oil because they need cash,” strategic investor and top commodities trader Dennis Gartman told CNBC.
Gartman's perspective appeared validated by Wednesday's sharp drop in oil prices.
Brent crude oil for November fell to $107.67 Wednesday, its lowest since Sept. 20.
Thursday, however, tells a different story.
Prices jumped $2.25 midday to a high of $110.42. The 2 percent hike comes as attention shifts to Syria where Turkey has launched retaliatory strikes, threatening disruptions of oil supply in the Middle East.
"The hostilities between Syria and Turkey reinforce supply fears, as a number of pipelines cross the region," Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt, told Reuters.
The path of protests in Iran, along with the unfolding Syria-Turkey tensions, will continue to determine the fluctuations in oil prices. Elevated hostilities between Syria and Turkey may tighten supply, sending prices skyward. Should the Ahmadinejad regime topple, oil prices will surely react in the extreme—either prices drop in anticipation of an easing of sanctions, or rise for fear of further instability.
Either way, oil markets will continue their convoluted tangle with the unpredictable ire unfolding in the Middle East.