That the rally this time couldn’t be sustained shows just how abnormal things are in the oil market.
With all sides pushing to get Iranian oil exports back online, one million barrels per day of Iranian crude exports are expected to be added to global supply in the coming months, and Saudi Arabia has only greater incentive to drive oil prices lower.
The API and other industry groups pushed hard for the measure lifting the export ban, which they called a relic of the 1970s, when an OPEC oil embargo led to fuel rationing, high prices and iconic images of long lines of cars waiting to fuel up.
The kingdom severed ties to Iran after attacks on two of its diplomatic posts following its execution of a Shiite cleric last weekend.
The low oil price continues to take its toll on investment in the US upstream oil sector.
Signaling a balanced approach, Turkey on Tuesday urged Saudi Arabia and Iran to defuse the tension following the execution of prominent Shiite cleric Nimr al-Nimr on Saturday, which prompted demonstrations by Shiites around the world.
On the supply side, inventories are already near record levels in United States, the world’s top economy. He said today that Saudi Arabia is perpetuating war crimes in its bombing of Yemen since March – and is being aided by the USA government with weapons in the effort.
He says “the geopolitics of energy will never be the same”. This provides a cushion against any unexpected turmoil.
Steady prices on Tuesday tracks a slight increase in Chinese shares, which offers hope that Monday’s 7 per cent plunge in equities was a flash in the pan, traders said.
So at the risk of sounding excessively cynical by mentioning the blindingly obvious, the suddenly soaring tension between predominantly Shia Muslim Iran and predominantly Sunni Muslim Saudi Arabia, which are right across the Persian Gulf from one another, has the potential to wreck this desperate Canadian conservative election game plan.
“The Saudis will move quickly to quash any violence, but the question will be whether they can keep any protests from flaring out of control”, Andlauer said Monday.
When the supply glut triggered a precipitous drop in the price of oil a year ago, the Saudis followed the advice of Obama’s acerbic former chief of staff, Rahm Emmanuel, by “never letting a serious crisis go to waste”.
In addition, Saudi Arabia has reportedly recruited Sunni powers throughout the region, deepening the conflict with Iran. There are nearly 3 billion barrels of oil and products like gasoline in developed countries’ storage tanks, according to the International Energy Agency. That narrow shipping channel is the world’s most important oil chokepoint, with 17 million barrels flowing through each day, according to the Energy Information Administration.
Iran wants to regain some oil exports that it lost while under economic sanctions, soon to be lifted, for its nuclear program.
He criticized USA political figures across the political spectrum for not meaningfully challenging Saudi Arabia and argued that money from Saudi Arabia and wealthy individuals from there had purchased influence in US institutions including the Clinton Foundation.
Iranian pilgrims would still be welcome to visit Islam’s holiest sites in Mecca and Medina in western Saudi Arabia, either for the annual haj or at other times of year on the umrah pilgrimage, he said.