Axis Two-Step?

North Korea's test of a nuclear weapon doesn't seem to be worrying the oil market, perhaps because its implications are so unclear, both in North Asia and for Mr. Kim's fellow nuclear aspirant, Iran. Uncertainty about the latter remains the biggest wild card for oil prices, and only a couple of months ago the risk of conflict with Iran over its nuclear program was a key component of $70 oil.

Informed speculation about the small apparent size of the blast suggests that the Korean bomb didn't work as well as expected, perhaps by an order of magnitude. Although there have been a few suggestions that the test might have been a hoax perpetrated with chemical explosives, pulling that off sounds nearly as complicated as building a nuclear weapon. A few other commentators have proposed another worrying possibility, that the device tested was actually a tactical-size warhead, along the lines of the old US nuclear artillery shells. Something like that could be even more useful to a regime that appears to expect to fight another war on the peninsula.

Iran will focus on the world's reaction to North Korea. If the consequences for Pyongyang--which has no strategic commodities such as oil--are light, or limited to condemnations without action, the mullahs will conclude that the Security Council members are unwilling to inconvenience themselves to block proliferation. This is likely already their working hypothesis, based on observing their negotiating tactics with the EU-3. A weak reaction to the North Korean bomb will increase the risk of a confrontation with Iran within a few years.