Over the last year on my The Bigger Picture videos I’ve been watching a potentially very bullish setup form across the oil markets and I was planning a post on that this week before the expected attack on Iran. That attack happened earlier than I expected on Saturday so I’m doing that today.

Before I look at that though, I’ll go through the reason why this conflict in Iran could cause a really serious problem in world oil markets in coming weeks and perhaps months.

World oil demand is currently about 105 million barrels per day. In the absence of major supply issues there is currently a surplus of two to three million barrels per day in oil supply above that demand level which is the reason that prices have been soft and kicking around the big support area at $50 to $55 in recent months.