Commenting on the recent news on pressured Oil prices in light of President Trump’s Iran sanctions announcement, as reported in City AM, Mihir Kapadia, CEO of Sun Global Investments said:
“Oil markets have been cautious as the current impact of the US sanctions on Iran remain unclear, with European and Asian allies continuing to resist Trump’ call to pull out of the JCPOA. With information unclear on how this would affect Iran’s oil and gas industry, coupled with the continued rise in American drilling, oil prices have been under pressure the past couple of days. Oil markets are expected to be slightly bearish until further clarity emerges over how Iran’s major oil and consumers react to the sanctions. For example, during the pre-JCPOA period, Iran sold its crude and gas in Indian rupee denominated transactions to circumvent the US sanctions, which would arise if the US dollar is used. Should other countries personalise their transactions as well, oil markets will find it tough to be bullish.
Meanwhile the other threat for the market continues to be the US shale sector, as the country continues to add on to its reserves. With the US on course to becoming the largest producer of oil by the end of the year, it is unlikely that OPEC and its partners will get a relief anytime soon.”
His comment was featured in City AM Online.