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Source: http://www.ft.com/intl/cms/s/0/e977f55c-f780-11e1-ba54-00144feabdc0.html#axzz263UHRGyb
The Oil Price Reaction to an Iranian Strike
(Financial Times-UK) Javier Blas - Conventional wisdom says that an Israeli - or American - attack on Iran's nuclear facilities will trigger an extraordinary oil price rally. But what if oil prices fail to rally or actually plunge? Colin Fenton, who heads commodities research at JPMorgan, has just released a note to clients warning: "If an attack occurred, we would not be surprised if the initial impulse were a smaller-than-expected and briefer-than-expected oil price spike followed by a stronger-than-expected oil price decline." He explained that first, Western countries could order a massive release of their strategic oil reserves even if there is no supply disruption; and second, the attack could damage global confidence, weakening economic growth and, thus, oil demand. The biggest one-day drop in oil prices occurred on January 17, 1991, as U.S. bombers started dropping ordnance over Saddam Hussein's troops in Iraq and Kuwait, and the International Energy Agency ordered the release of the strategic reserves that day. Immediately after the 9/11 attack, oil prices surged nearly 5%, but three months later oil prices were 25% lower.