Oil Prices May Get Volatile As Trump Reimposed Sanctions On Iran

The oil watchers are foreseeing a growth of volatility after a long period of low profile oil prices. This took place after the decision of President Trump to restore the sanctions on Iran.

This decision led the crude oil to elevate by 19%, which resulted in the hike of price, not experienced since 2014.

Post the production depletion by Saudi Arabia, Russia, and Venezuela as well as after taking away the Iranian oil, the market will offer a very slim margin for error.

The buffer regarding the supply of crude oil has worn down drastically, which compelled the market to become vulnerable to the geopolitical and other changes. The supply of the crude oil also crashed due to a high supply in 2015 and 2016.

Apart from these factors, other factors like production growth from the shale fields on Texas and resurgent US dollar may also shake the oil prices.

As per Ben Cook, who is the portfolio manager at an energy investment firm, BP Capital Fund Advisors, the balance of the oil prices will receive a huge blow and will shove it into a volatile period.

According to the head of Energy Research at Goldman Sachs Damien Caourvalin, the oil price volatility will encounter a steep hike.

The analysts speculate that the dissolve of the Iran nuclear deal will result in a strenuous situation which was already very sensitive.

The production from Venezuela has encountered a drop of 600,000 barrels per day. The Vice President of the US Mike Pence has also asked Venezuela to call off the artificial presidential election that was set for 20 May.

Cook further stated that the loss of even 300,000 to 400,000 barrels may hike the oil prices by $5 each barrel.

Goldman Sachs had also requested the US to tap the stockpile of oil, which was stored for an emergency at the Strategic Petroleum Reserve. This will result in the stabilization of loss in the Iranian production.

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