Early in November, the sanctions that the Trump administration vowed to place on Iran officially went into effect. There were financial analysts who were calling for this event to mark the beginning of higher oil prices, however, the oil market remained quite calm as sanctions began. Matt Badiali is one financial analyst who is still calling for higher oil prices due to the sanctions. He is an expert on all things related to the natural resource sector. He spent much of his career going around the world inspecting natural resource assets first hand as a geologist. Matt Badiali recently broke down the reasons the oil market remained quiet after the sanctions began, and he believes that it will be the American consumer whose pocketbook is eventually impacted by rising oil prices.
Matt Badiali says that the sanctions never officially started and that is the main reason that oil prices did not react as everyone else had been anticipating. There are eight countries that currently purchase a lot of oil from Iran, and they have been given a waiver to continue to buy oil for the next six months. However, after the six-month grace period ends, the US will punish any country who purchases oil from Iran.
The reaction of the oil market was exactly what the Trump administration wants. They are hoping to put enough pressure on Iran without causing oil prices to spike in the process. Matt Badiali feels that if the sanctions stay in effect, they will eventually push oil higher. He is anticipating that Iran will see its oil exports drop significantly after the six-month grace period. He does not believe that any other country will have the capabilities to fill in the supply deficit that he is forecasting. Matt Badiali also pointed out that Venezuela is producing much less oil than it used to, which will further put more pressure on the supply side of oil. His advice to American consumers is to be ready to pay dearly at the pump when summertime comes. He feels that it is the perfect time for investors to position themselves accordingly.
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