After the sanctions that had been placed on Iran officially went into effect, market participants were stunned because they expected oil prices to really move. With Iran being a top oil exporter, everyone assumed the sections would have immediate effects on the oil market. Matt Badiali is a financial analyst who still believes that sanctions will cause oil prices to rise. He has over twenty years experience under his belt as a geologist. During his training, he learned how political and economic factors can drive the prices for commodities. He has been predicting a rise in oil prices and he still feels sanctions could play a role in higher oil prices in the next few months. He breaks down the reasons to his subscribers as to why the oil market shrugged off the idea of sanctions.
Matt Badiali says that in anticipation of the coming sanctions, both the United States and Saudi Arabia increased oil production. The countries did this so there would be no supply disruptions once the sanctions started. Mr. Badiali also pointed out that there are still several countries that can continue purchasing oil from Iran for at least six more months. Since Iranian oil is still coming to market, there are no major oil shortages now.
The goal of the Trump administration regarding the sanctions is to minimize any military and political influence that Iran has in the Middle East. The administration is hoping to be able to apply as much pressure on Iran without causing major price jumps in oil. Matt Badiali feels that oil is going to rise after the six-month grace period ends. When this occurs, he estimates that Iran’s oil exports will drop dramatically and cause a major oil deficit in the oil markets. Matt Badiali also says that the world will not be able to rely on Venezuela, which used to be a major oil exporter, to fill in this deficit. Venezuela has been producing much less oil than it did a few years ago and this is a trend that Mr. Badiali feels should continue for the coming months.
Matt Badiali’s: Twitter