Under the leadership of the Trump administration, the United States withdrew from the deal with Iran involving nuclear program. Until a new deal is agreed upon, sanctions have been placed on Iran and have taken effect earlier this month.
President Trump believes that the sanctions will restrict Iran’s military presence in the Middle East and hopefully reach a new agreement regarding its nuclear activities. The Trump administration is hoping to apply economic pressure on Iran without causing oil prices to surge in the process. It will take some time before the effects of the sanctions are felt.
Even though the Trump administration feels oil prices will be largely unaffected, there is a possibility that consumers in the United States feel pain at the gas pump. One financial analyst who sees higher oil prices eventually from the Iran sanctions is Matt Badiali. He spent much of his life traveling the world as a geologist and he understands the factors that can drive the prices of natural resources.
The oil market did not move much after the Iran sanctions went into effect. Matt Badiali’s Freedom Checks Are Real After All. Matt Badiali believes it is because the United States is allowing eight countries to continue buying oil from Iran for six more months, meaning the sanctions won’t have much of an impact until these countries have to stop purchasing oil from Iran.
There is also more oil on the market because both the United States and Saudi Arabia increased oil production. In the short-term, Matt Badiali feels that there is too much oil on the market, but he believes that is going to change soon because Venezuela is producing 600,000 barrels a day less than it did a year ago and he believes the country’s production numbers are only going to get worse over the next few months.
Iran currently exports 1.5 million barrels of oil daily, but Matt Badiali feels that after the countries can no longer accept Iranian oil, Iran’s exports will fall by 900,000. Oil demand also grew by 2.1 million barrels of oil a day and this trend may continue over the next few years.
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