Oil Could Hit $130 In "Worst Case Scenario": JPMorgan

Oil surged as much as 5% yesterday on reports that the US embassy in Iraq is preparing to be evacuated in response to heightened security risks in the region. At the same time, the State Department announced plans to order non-essential embassy personnel and their families to leave Bahrain and Kuwait, and the British Navy issued a rare warning to ships in the region, stating it “has been made aware of increased tensions within the region that could lead to an escalation of military activity having a direct impact on mariners.” The advisory urged caution in the Persian Gulf, the Gulf of Oman, and the Strait of Hormuz.

To be sure, as reported here previously, tensions in the region have been rising as talks between the US and Iran over its nuclear program seem to have reached an impasse. This coincides with the expiration of the two-month deadline set by Trump for reaching a deal, with a sixth round of nuclear talks expected to take place in Oman on Sunday. The US administration remains hopeful about the possibility of reaching a nuclear deal with Iran and continues to oppose military action. Meanwhile, the Trump administration appears to be taking preparations for potential military action, possibly by Israel, against Iran.