Inflation; oil prices
- Oil prices remained near three-and-a-half-year highs on May 11th
- Iran produces around 4 percent of global oil supplies
- The top exporter of oil is Saudi Arabia and the top producer of oil is Russia
- Since 2017, both Saudi Arabia and Russia have made efforts to withhold oil supplies to prop up prices.
- Recently, the United States has withdrawn from the Iran-Nuclear Deal and announced its plan to reimpose sanctions on Iran. This is expected to cause decrease in Iran’s oil supply. As a result, there might be disbalance in the oil market due to undersupply.
- Brent Crude figures (the international benchmark for oil prices) reached its highest ($78/barrel) since November 2014
- Many analysts expect oil prices to rise as Iran’s exports fall.
- Further, US’s withdrawal from the deal has raised the risk of conflict in the Middle East. This has heightened the concerns of instability in the oil market.
- According to analysts, OPEC and other producers have ability to react to this potential supply disruption. Along with OPEC, rising S. crude oil production may help fill Iran’s supply gap