How Iran Influences the Crude Oil Market

A change in the supply and demand relationship in the oil market is the most influential factor on which commodity traders should focus. The principle is very straightforward: when supply is greater than demand, prices tend to fall, as they did in mid-2014. On the other hand, when demand exceeds available output, prices tend to go up, as they do during times of geopolitical crisis, especially in the troubled Middle East.

Iran is the world’s third-largest Oil producer, and traders closely monitor news related to the country as they attempt to predict how its production levels could influence the global market. In February, Iranian production reached 3.83 million barrels per day (bpd) according to data from the US EIA (Energy Information Administration). Currently, crude output from Iran is almost at a 9-year high, after the country accelerated production when the US lifted trade sanctions in January 2016. Between December 2015 and February 2018, Iran increased Oil production by about 37%, or 1,035,000 bpd. The country is aiming for production of 4.7 million bpd by 2021, which could put additional pressure on the international Oil market.

Last year, the prices of WTI and the Brent crude averaged USD 50.79 and USD 54.15 per barrel respectively. Oil prices have recently been supported by OPEC decisions to cap its members’ production to achieve more stable market conditions and a stronger long-term outlook. OPEC’s largest and most powerful producer, Saudi Arabia, needs Brent crude prices at about USD 70 this year in order to finance its economic projects and to support the initial public offering of Saudi Aramco, the state-owned Oil company. For Iran, a price of around USD 60 would be enough to meet its domestic commitments. Prices are now trading around the USD 70 level, and Iran is worried that the recent rally (a rise of about 45% since June 2017) will support US drilling activities, and by extension, production and exports, which have doubled since last year. This could flood the market, putting added pressure on prices and severely affecting all other Oil-exporting economies.

Commodity trading brokers compete to offer the best trading conditions to investors who want to take advantage of the price swings of Oil and other popular assets. Trading broker UFX.com is among the most well-respected in the industry, and provides some of the fastest executions, tight spreads, advanced tools and a range of trading accounts designed to cater to all trading styles.

 

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Recent Posts

Leave a Comment

*

People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
Self Directed IRA's, nest egg

The Skinny On Self Directed IRA’s

Never heard of a self-directed IRA, you’re in good company.  After all, only 2% of the U.S. population has taken the time to... more →