“Sic semper tyrannis” (thus always to tyrants). This well-known tag evokes the proper fate of despots. That Ali Khamenei was a tyrant and his theocratic regime tyrannical cannot be doubted. There is little doubt that it killed thousands of protesters in early January. Decent people should welcome its decapitation. Yet, before doing so, one should also ask: what will come next?
Markets have, as always, tried to address this question from the narrow, albeit important, perspective of investors and traders. So far, the reaction has been muted. By March 3, the price of Brent crude had risen to $80, 9 per cent above its level just before the launch of “Operation Epic Fury” on February 27. Neither the level nor the change is striking by the standards of historic shocks to oil prices: in real terms, oil was 6 per cent above its average since 1972 and far below levels reached during the bigger oil price shocks.
The rise in gas prices was much sharper: spot prices for Dutch TTF gas jumped 40 per cent on fears over Qatari exports of liquefied natural gas. Markets did display concern over the future of inflation, with gold prices up and bond prices down. But none of this is surprising or dramatic. The implicit assumption is that the fury will be brief, with few if any long-term ramifications. (See charts.)