Oil: Guided by the sanctions - NBF

Oil bulls are rubbing their hands as yesterday’s announcement by the U.S. government that it is withdrawing from the Iranian nuclear deal sets the stage for the re-introduction of sanctions, according to Krishen Rangasamy, Research Analyst at NBF.

Key Quotes

“While it’s too early to say by how much that would affect Iran’s oil output (if at all) ─ one cannot rule out the possibility that a new deal is struck over the coming months ─, odds are that the world’s excess oil demand situation won’t get any better. Indeed, even before the announcement, 2018 global oil demand was projected to be higher than supply by about half a million barrels per day (bpd).”

“Should new sanctions force Iran to return to 2015 levels of oil production, i.e. a supply cut of 1 million bpd from current levels, the world’s excess demand would rise to about 1.5 million bpd, the largest since 2007.”