Crude Oil plunged by over 6% last week making it the fourth consecutive weekly loss.
The sanctions against Iran start today meaning less oil will be available in the markets, however, supply concerns have been watered down recently as many parts of the world will be spared sanctions by the USA for continuing to import Iranian oil.
An oil prices spike which would not help Trump and the Republican party in the mid-term elections (6th November) so we currently have some price manipulation going on till they bank the votes first.
Iran currently exports about 5% of the total global crude oil (2.6 million barrels a day) market with Japan, India, the EU, South Korea, Italy, Turkey and China, let off the hook to continue importing Iranian oil without sanctions, temporarily.
These countries have been given 6 months to phase out their purchases of Iranian oil by the USA.
Whether a country like China will stop importing from Iran is another question. China have recently suspended oil imports from the USA as part of their ongoing trade war and is not going to allow itself to be bullied by Trump. This will be one factor which will determine future prices.
Saudi Arabia is waiting in the wings to replace the Iranian oil supply but these deals take time to be put in place and I am sure they are attempting to negotiate deals with many of these counties.
Add to this the fact that oil production across the globe has been significantly higher versus demand in the last 2 months and we have all our answers as to why the price has plunged.
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