Oil near multi-year highs on Iran sanctions

Oil near multi-year highs on Iran sanctions

Inflation; oil prices

News:

1. Oil prices remained near three-and-a-half-year highs on May 11^th

Important Facts:

2. Iran produces around 4 percent of global oil supplies
3. The top exporter of oil is Saudi Arabia and the top producer of oil is Russia
4. Since 2017, both Saudi Arabia and Russia have made efforts to withhold oil supplies to prop up prices.
5. Recently, the United States has withdrawn from the Iran-Nuclear Deal and announced its plan to reimpose sanctions on Iran. This is expected to cause decrease in Iran’s oil supply. As a result, there might be disbalance in the oil market due to undersupply.
6. Brent Crude figures (the international benchmark for oil prices) reached its highest ($78/barrel) since November 2014
7. Many analysts expect oil prices to rise as Iran’s exports fall.
8. Further, US’s withdrawal from the deal has raised the risk of conflict in the Middle East. This has heightened the concerns of instability in the oil market.
9. According to analysts, OPEC and other producers have ability to react to this potential supply disruption. Along with OPEC, rising S. crude oil production may help fill Iran’s supply gap