Iran leads list of geopolitical risks pushing up oil prices

President Donald Trump’s decision to withdraw the U.S. from the Iran nuclear deal and reinstate all sanctions had been anticipated in energy markets. The price of U.S. crude oil has been volatile in recent days, spiking above $70 per barrel. This will continue to be a dynamic situation geopolitically and economically, and it won’t be a one-day story.

The president’s move will not remove all Iranian crude from world markets — and it may take months before the sanctions against Iranian oil are reinstated — but it will have an impact. It comes at a time when crude oil in storage around the world has been drawn down and markets have been firming.

Looking out just a couple of years, the fundamentals are even stronger because oil giants’ slashed capital budgets over the last three years will restrain future production growth, especially in higher-cost areas such as deepwater and oil sands…

 

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