This is a Test

As I’ve said before, an attack on Iran would be very foolish for many reasons. But to leave aside all the moral reasons, since that seems to bore people, it’s sufficient to focus on the economic consequences to people here in America.

The minor skirmish yesterday between a US cargo ship and some Iranian speed boats caused oil to jump $3 per barrel almost immediately.

US military personnel aboard a cargo ship traveling into the Persian Gulf fired nearly a dozen warning shots at Iranian speed-boats Thursday, according to several breaking news reports.

Reports of the incident prompted a nearly immediate spike in oil prices, which jumped $3 per barrel.

…The cargo ship apparently was sailing into the Strait of Hormuz, site of a showdown between US Navy warships and Iranian speedboats in January.

More than one Iranian “fast boats … were approaching this vessel at a high rate of speed,” in the Persian Gulf, MSNBC’s Pentagon correspondent said. US military personnel on board fired eight .50-caliber rounds and three warning shots from M-16s when the boats got within 100 yards of the cargo ship. After the shots were fired, the ships veered off, according to MSNBC.

Miklaszewski said the military believes the Iranians were mostly trying to harass the ship and perhaps see how close they could get before being fired upon. He said those types of boats could not do much damage unless they got nearly right up next to the ship and were packed with explosives.

This does not seem to be a very dangerous incident as far as military matters go, and yet look at the logarithmic response in oil prices. Just imagine if something bad really happened. Use your imagination. Extrapolate.

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