Oil Markets Seen Withstanding Iran Attack Shock in Global Investor Survey

More than 70 percent of investors say an attack on Iran’s nuclear facilities would create only a short-term disruption in oil markets, according to a quarterly Bloomberg Global Poll.

About a third of the 1,209 global investors, traders and analysts surveyed Jan. 23-24 said an attack may trigger an oil shock leading to a global recession.

The European Union agreed Jan. 23 to ban oil imports from Iran starting July 1 as the West increased pressure on the Islamic republic to halt its nuclear program. An Iranian member of parliament reiterated the same day his country will respond by closing the Strait of Hormuz, the regional transit point for about 20 percent of the world’s oil, the Fars news agency said. Saudi Arabia has pledged to make up for any lost production.

While conflicts may affect oil markets over a longer period of time, investors may have “lurking confidence that other oil- producing nations would step up to increase production,” said J. Ann Selzer, president of Selzer & Co., the Des Moines, Iowa- based company that conducted the survey for Bloomberg.

Forty-six percent of respondents said they would maintain their crude-oil investments over the next six months, while 21 percent said they would increase them and 17 percent said they would reduce their investments. The poll has a margin of error of plus or minus 2.8 percentage points.

Price Expectations

Crude for March delivery rose for a third day today, trading 17 cents, or 0.2 percent, higher at $99.87 a barrel as of 12:07 p.m. on the New York Mercantile Exchange. The contract settled at $99.70 yesterday, the highest closing price since Jan. 19. Prices are up 16 percent in the past year.

Forty-three percent expected crude oil prices to rise in the next half year, while 22 percent said they would fall, the survey showed.

Amid the increased tension and efforts to limit Iran’s oil exports, its banking sector and its ability to engage in international trade, most investors said a military conflict and a blockade of the Strait of Hormuz aren’t likely.

One in five respondents said it’s very likely or fairly likely Iran will carry out its threat to close the waterway.

Fifty-four percent of those surveyed said they are confident there won’t be military action against Iran’s nuclear program in 2012, while 30 percent said there will be a strike. Fifty-four percent of those surveyed also said an attack on the nuclear facilities would provoke a conflict. Forty-two percent said Iran would retaliate by attacking Israel.

Nuclear Iran

On the best response from the international community if Iran were to develop a nuclear weapon, 45 percent of respondents said it was “such a lethal threat that military action against Iran” would be necessary, while 34 percent said it was a situation the world could live with and 24 percent had no idea.

While 57 percent of U.S. investors said military action would be necessary if Iran (OPCRIRAN) acquired a nuclear weapon, 39 percent of those outside America said they agreed. Thirty-eight percent of those surveyed overseas said the world could live with a nuclear-armed Iran, versus one in four in the U.S.

Fifty-nine percent of the U.S. investors said an attack on Iran’s nuclear facilities would probably prompt attacks on U.S. civilian and military targets in the Middle East. Forty-six percent outside the U.S. shared that view.

Tougher Sanctions

Respondents also were divided about the effects of tougher sanctions on Iran. While 43 percent said the recent sanctions targeting Iran’s central bank diminish the chances that the nation will make concessions over the nuclear program, 36 percent said the sanctions may encourage it to negotiate.

The U.S., U.K. and Canada took coordinated action on Nov. 21 targeting Iran’s financial sector, with implications for any entities that do business with both Iran and Western nations. On Dec. 31, President Barack Obama signed into law congressional sanctions on the Persian Gulf nation’s central bank aimed at complicating payments for its oil by refiners in any country.

The EU’s measures announced this week included a ban on trade in gold, precious metals, diamonds and petrochemical products from Iran, and an asset freeze on Iranian banks and port operators that will make tens of billions of euros in annual trade with Iran almost impossible.

The U.S., European allies and Israel accuse Iran of seeking to develop nuclear weapons. Iran’s leaders say their program is solely for civilian energy and medical research.

In a Nov. 8 report, the United NationsInternational Atomic Energy Agency raised questions about possible military dimensions of Iran’s nuclear program.

To contact the reporter on this story: Indira A.R. Lakshmanan in Washington at ilakshmanan@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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