According to Reuters, the tightening of US sanctions against the oil sector in Iran and Venezuela is one of the key factors holding back global oil supplies and increasing its value.
Recall that in November 2018, after leaving the international nuclear deal with Iran, Washington imposed restrictions affecting the oil industry of the Islamic Republic. Currently, the situation has been complicated by the sanctions imposed on the oil sector of Venezuela.
The White House administration has previously provided special exemptions for eight countries, allowing them to temporarily import Iranian oil. However, the exemption from sanctions will cease to act this week, namely May 2, 2019, analysts remind.
According to the American authorities, the global supply of black gold will remain at the same high level, despite the sanctions. The reason for this, experts believe the boom of shale oil production in the United States. However, only light oil grades are in excess, and the market is experiencing a shortage of medium and heavy grades that are banned and mined in Venezuela and Iran.
According to experts, not all customers are willing to buy heavy and medium oil at inflated prices. The current situation may lead to a serious imbalance in the global black gold market, experts predict. The current confrontation between buyers and sellers is partly due to the vagueness regarding the future supply of Iranian oil and the possible increase in sanctions.
"Fuel to the fire" adds uncertainty from the leadership of China, the largest consumer of oil in the world. It is not excluded that the Celestial Empire may neglect the lifting of the exemption from anti-Iran sanctions, and Washington will not impose restrictions on Chinese companies importing Iranian oil. Recall that these companies are key buyers of American oil and liquefied natural gas. In case of such scenario, the rise in prices for oil sellers will become difficult, experts are sure.
The material has been provided by InstaForex Company - www.instaforex.com