Geopolitical dangers abound for global oil supply | Financial Times:
As crude prices collapsed in the fourth quarter last year, traders questioned the effectiveness of supply cuts led by Saudi Arabia and Russia, as US shale output boomed while uncertainty mounted over the effects of the US-China trade spat on global demand.
Brent crude has since recovered but that negative narrative remains, capping the price at about $60 a barrel. However, traders should not forget that volatile production from Opec countries such as Iran, Libya, Nigeria and Venezuela, could easily propel prices the other way.
Market watchers are keeping an eye on US sanctions against Iran’s oil sector, for example, that have shrunk exports by 60 per cent since last spring to about 1.1m barrels a day. This slide took place even as big buyers of Tehran’s oil were issued allowances to continue some crude purchases. The world is now watching for what happens in May when these waivers expire and if further falls in Iran’s supply loom. An erratic relationship between the US and Saudi Arabia — Iran’s regional arch rival — could only lead to more unpredictability.
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