The price of crude oil has hit its highest level in two and a half years following the unrest in Iran.
The price of a barrel of Brent crude at one point today was as high as $67.74, a level not seen since the middle of May 2015.
The spike in the price is excellent news for speculators, who in recent weeks have been piling into oil on the back of recent momentum in the price, generated by a disruption to production in Libya and a crack in the Forties pipeline that connects the North Sea to the Scottish mainland.
In the week before Christmas, hedge funds had placed record bets that the crude price would continue to rise.
But is the rise justified by the street protests in Iran, the third-biggest producer in the Opec cartel, during the last six days?
Most oil industry experts think not.
Iran’s oil production is at present reasonably healthy.
Since the deal struck in July 2015 between Iran and the US, China, Russia, France, Britain and Germany to curb the Islamic Republic’s nuclear programme, production has risen from 2.91 million barrels of crude per day to 3.8 million barrels per day, between 2.2-2.3 million of which are exported.
These exports are vital to Iran’s economy.
The sanctions cost the country more than $160bn between 2012 and 2016 and eventually forced it to the negotiating table.
Yet there is no sign, at the moment, of the street protests disrupting Iran’s oil production.
For that to happen, unrest would have to spread among workers in the oilfields, which is by no means a given.
The reasons for the protests are mixed and vary from unhappiness at the high level of youth unemployment; annoyance at the money squandered by Tehran supporting President Assad’s regime in Syria; Houthi rebels in Yemen and the militia group Hezbollah; unrest among Iran’s liberal middle classes at attempts by the government to push up the cost of foreign travel and, among poorer Iranians, anger at rising food prices.
This latter factor is a direct result of the decision in 2013 by President Hassan Rouhani, the main target for the protests, to cut subsidies for basic foodstuffs like flour, bread and rice and subsidies on fuel.
This was done in response to the sanctions but, ironically, the cuts were originally set in train by Mr Rouhani’s predecessor, Mahmoud Ahmadinejad, whose conservative policies were supported by many of those joining the protests in rural areas.
However, if the unrest did spread to the oilfields, the regime in Tehran will be able to buy off malcontents as in the past.
Were the recent strength in the oil price to persist, it is possible that Iran will be tempted to cash in on it by increasing exports, in spite of the fact that Opec’s current production quotas mean it is not supposed to produce more than 3.797 million barrels per day.
It is also doubtful that Iran could produce much more than that in any case. The country is currently producing as much oil as it can and needs both foreign expertise and investment to bring about meaningful increases in capacity.
But increased exports would boost the regime’s ability to ease the situation – as well as bringing downward pressure on oil prices.
That may happen before long in any case. Forties is up and running again, Libyan production is recovering and output in countries like the US, Canada and Brazil is also growing strongly. So it would take something pretty dramatic in Iran for prices to head back towards $100 per barrel.
But one unpredictable factor in all this is Donald Trump. He hates the Iran nuclear deal and, later this month, could scupper it by refusing to renew the waivers on the sanctions that were introduced under it.
This would set him at odds with China, Russia, Britain, France and Germany – but would immediately hit Iran’s ability to bring in outside investors and, potentially, hit its oil exports.