The oil market has shocked many analysts who were calling for higher oil prices. One financial analyst who has been saying that oil will eventually rise in price is Matt Badiali. He works for Banyan Hill Publishing and specializes in natural resource investments. He spent over twenty years traveling around the world as a geologist. One of his main arguments for higher oil prices were the sanctions that were placed on Iran. It was early in November that the sanctions went into effect. The Trump administration has been hoping to place enough pressure on Iran in order to force the nation to reach a new agreement regarding their nuclear program. Although it seems the Trump administration was successful in not disrupting the global oil market, Matt Badiali feels that the sanctions are going to eventually cause oil prices to skyrocket.
One of the reasons the price of oil did not move was that both the United States and Saudi Arabia increased oil production ahead of the coming sanctions. This means there is a current supply surplus in oil, which can temporarily keep the oil market calm. Matt Badiali also points out that it will be another six months before the sanctions have fully gone into effect. There are eight counties who have been given a six-month grace period to continue to buy oil from Iran. Until this period ends, the oil supply on the global markets should be able to meet demand.
Although it seems oil prices are going to remain steady, Matt Badiali feels that there will eventually be oil shortages, which will eventually push oil prices higher. According to his work, he estimates that after countries can no longer buy Iranian oil, Iran’s oil exports will fall by almost a million barrels of oil a day. He also pointed out that the rest of the world will not be able to rely on Venezuela to pick up the slack. Once a great oil producer, Venezuela now produces substantially less oil than it did just several years ago and the country continues to see its production fall.
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