With new sanctions on Iran coming into effect in November, concerns are growing that there will have a major supply issue by the end of the year.
The US continues to put pressure on all and any country who currently purchases Iranian crude oil or face sanctions. China, who currently buy approximately $1.5 billion worth of oil from Iran a month are on Trumps’ radar and pressure is being ratcheted up.
If China cave to Trump’s demands as part of some concession related to their ongoing trade war we should see the price of oil rise higher. Concerns remain on who will fill the Iranian supply gap and how long this will take.
Saudi Arabia are the country most likely to fill the void. Trump is very concerned with how higher oil prices could impact the US Mid-Term elections.
Voters may blame him personally for the higher cost of a trip down to the mall and vote for Democratic candidates. He has already begun to urge all OPEC members to start pumping more oil to stabilise the prices.
We have a race now between supply and demand. What will likely happen is that prior to the US elections the Saudis will make some grand statements declaring that they will fill all the Iranian oil and by just saying so they will prevent the price going through the roof.
In my opinion, the real push towards $100 will begin, post US elections, as the reality of the situation will kick in, that filling the Iranian supply can’t happen that fast.
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