Oil prices briefly jumped above $80 a barrel for the first time in 2024 on Friday, January 12 2024 after the US and UK struck targets following more than 25 attacks by Houthi militants on shipping since November 2023.
Could this price action be reliably forecasted? Yes.
What is Motivational Analysis enabled by machine learning?
TerraManta machine learning platform forecasts future commodity prices (starting with oil futures) by analyzing the impact of geopolitical and economic events on market fundamentals (supply, demand, inventory, distribution, exports, imports) and resulting price actions.
If certain conditions impact oil supply in the same manner (magnitude), the price action will be same or similar if identical conditions begin to form again causing the same impact on the oil supply.
This is a preview of how TerraManta machine learning works and why motivational analysis matters. TerraManta is the first company to pioneer and incorporate Motivational Analysis powered by machine learning while forecasting future commodity prices.
Let's begin.
February 2022: Russia invades Ukraine
In December 2021, TerraManta correctly (and sadly) forecasted that the probability of invasion was nearly 100%.
In August 2022, TerraManta shared an alternate perspective why Russia invaded Ukraine.
“$12.4 trillion of Ukraine’s energy deposits, metals and minerals are now under Russian control, according to SecDev - a Canadian geopolitical risk firm."
October 2022: Iran promises to provide Russia with more drones and missiles
According to senior Iranian officials, Iran has promised to provide Russia with surface to surface missiles, in addition to more drones, two senior Iranian officials and two Iranian diplomats told Reuters.
A deal was agreed on Oct. 6 when Iran's First Vice President Mohammad Mokhber, two senior officials from Iran's powerful Revolutionary Guards and an official from the Supreme National Security Council visited Moscow for talks with Russia about the delivery of the weapons.
"The Russians had asked for more drones and those Iranian ballistic missiles with improved accuracy, particularly the Fateh and Zolfaghar missiles family," said one of the Iranian diplomats, who was briefed about the trip.
March 2023: Iran Agrees to Purchase Russian Fighter Jets
Tehran has agreed to purchase 24 advanced Sukhoi Su-35 fighters from Russia, significantly upgrading the capabilities of the Islamic Republic’s air force.
Egypt originally agreed to purchase the planes but canceled the deal after pressure from Washington. U.S. National Security Council spokesperson John Kirby confirmed in December that Iran would likely be the new buyer.
Iranian pilots have been training in Russia on the Su-35 since early 2022.
Introducing Russia's motivations
Create conditions where the United States will have to divert ammunition supplies to another country instead of Ukraine.
Disrupt supply chains of importance to the United States and its allies.
Fuel inflation in the United States during the election year and shift attention to domestic policies instead of foreign policies and international conflict management and resolution.
Russia's motivations are clear while examining 2 recent events: Hamas attack on Israel on October 7, 2023 Houthi's attacks on ships in the Red Sea.
October 2023: Hamas attacks Israel
The Hamas terrorist attack on Israel on October 7, 2023, will go down as one of the worst terrorist attacks in history.
Russia has maintained a relationship with Hamas for more than 17 years, since the group’s leaders visited Moscow in March 2006, just weeks after taking power in the Gaza Strip. President Vladimir Putin repeatedly invited Hamas’ political and military leadership back to the Russian capital. Hamas officials and commanders secured high-level meetings with then-Russian President Dmitry Medvedev, Foreign Minister Sergey Lavrov, and Russia’s special envoy for the Middle East, Deputy Foreign Minister Mikhail Bogdanov, among others.
Russia has simultaneously built a close working relationship with Iran and its military and terrorist arm, the Islamic Revolutionary Guard Corps (IRGC), with increasingly tight financial, military, as well as political ties. Since the launch of Russia’s full-scale invasion of Ukraine in late February 2022, Iran and Russia have responded to U.S. sanctions with a program to “dump the dollar” and to connect bank-to-bank using SPRS, the Russian counterpart of the financial messaging system SWIFT, utilized by the rest of the world, with the goal of sanctions busting and intensifying their mutual economic ties.
By January 2023, Russia had become the largest foreign investor in Iran, putting $2.7 billion into Iranian manufacturing, mining, and transport sectors, according to Ehsan Khandouzi, the country’s finance minister.
Two weeks before Hamas carried out its brutal October. 7 terrorist attack on Israel, Russian Defense Minister Sergey Shoigu traveled to Tehran to meet with Iran’s top security official, Ali Akbar Ahmadian, as well as the head of the IRGC air force, Amirali Hajizadeh, to inspect Iranian-built drones and missile- and air-defense systems. During his visit, Shoigu stated that Tehran and Moscow had worked for months on long-term military cooperation, with “serious military and defense dimensions” and “an entire range of planned activities, despite opposition from the United States and its allies.
October 2023: The first plane carrying American ammunition for Israel’s offensive on Gaza lands in Israel
The plane landed on October 11, 2023.
The United States said it would send new supplies of air defenses, munitions and other security assistance to its ally to battle Hamas.
Aside from the ammunition, the United States is also believed to be providing more interceptors to Israel to replenish its Iron Dome. In recent days, a barrage of rockets from Gaza has hit several targets in Israel, evading its much-vaunted aerial defense system.
Israel is a major long-term recipient of US military aid and enjoys a steady stream of American financial support.
Ammunition sent to Israel will not be sent to Ukraine. It's very easy to see what country benefits: Russia.
November 2023: Houthis hijacked a commercial ship in the Red Sea
Houthis have attacked ships in the Red Sea 25 times since November 2023.
The increasing Red Sea crisis may impact trade as it is expected to push shipping costs by up to 60 per cent and insurance premium by 20 per cent, according to a report by economic think tank GTRI.
This conflict could also result in increased shipping costs (40-60%) and delays due to rerouting (up to 20 days more), higher insurance premiums (15-20%), and potential cargo loss from piracy and attacks.
The situation around the Bab-el-Mandeb Strait, a crucial shipping route connecting the Red Sea and the Mediterranean Sea to the Indian Ocean, has escalated due to recent attacks by Yemen-based Houthi militants.
Due to these attacks, the shippers are taking consignments through the Cape of Good Hope, resulting in delays of about 20 days.
The Red Sea shipping crisis risks driving up oil prices and inflation.
Oil is in the price of everything. Higher oil prices will add to the inflationary pressure.
The Full Story: How TerraManta forecasted higher oil prices after strikes on Houthis
While TerraManta machine learning platform continues to analyze thousands of motivational vectors, it's helpful to share a preview of motivations analyzed by TerraManta:
Russia intentionally built a close relationship with Iran
Iran supports both Houthis and Hamas
Attack on ships in the Red Sea: directly benefits Russia by disrupting the US and allies' supply chains, increasing inflationary pressure, and influencing election year politics in the US
Attack on Israel by Hamas: directly benefits Russia by diverting ammunition supplies from Ukraine
Commodities ran, run, and will run the world
TerraManta is the only company which applies machine learning to forecast commodity prices by continuously learning how geopolitical events influence fundamentals (supply, demand) and result in a price action as evidenced by markets behavior.
TerraManta welcomes serious inquiries from investors who want to see machine learning solve real problems in today's world.
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