Chasing the Dragon (Oil)

Last week, this intriguing story popped up on Reuters:

LONDON, Aug 17 (Reuters) - Bank of AmericaMerrill Lynch has dropped Dubai state-controlled Dragon Oil as a client because of its ties with Iran, sources close to the matter said, in a sign the United States may be using its clout with bailed-out banks to achieve foreign policy goals.

Dragon Oil said on Monday that BoA Merrill Lynch, an investment banking unit of Bank of America, the beneficiary of a $45 billion state bailout, was no longer advising it on ongoing takeover talks. “Merrill Lynch have had to relinquish the mandate following an internal issue with Bank of America,” a spokesman at Dragon said.

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But while BofA/Merrill seemingly cannot advise Dragon, which produces oil in Turkmenistan but routes 90 percent of its production through Iran, it can push the stock to its clients — who appear to have been piling in this Monday.