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Iranian Oil Sanctions Update & Intensifying Geopolitical Landscape | May Advisor Preview

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Crude oil and refined product prices continued their gradual rise in April, ultimately reaching the highest price points since the fourth quarter of 2018. World oil market dynamics, evolving global economics, and the everchanging geopolitical risk environment helped shape the price scene through the first third of 2019, while acting as a likely precursor for energy market volatility through the remainder of the year.

In this edition of the Breakthrough Advisor, the Applied Knowledge team offers an in-depth analysis of price drivers to remain cognizant of, in addition to providing insight into the most recent updates in the world energy market. Their holistic prognosis reinforces the value of energy market knowledge Breakthrough provides to shippers, while simultaneously presenting extended expectations for the cost of fuel used to move goods to market.

Iranian Oil Sanction Waivers

The Trump Administration’s decision to abandon the Iran nuclear deal in May 2018 was a key driver of oil and diesel price volatility over the past calendar year. With this announcement came the strategy of bringing Iranian crude oil exports to zero, depriving Iran of one of its most important revenue streams.

The supply implications of this transition have placed an overarching element of price risk on crude oil and refined products, as the loss of Iranian oil supply to the world market could theoretically have direct price implications for shippers and their transportation fuel spend. Waivers were granted to a select group of Iranian importers to ease into the Trump Administration’s inevitable mandate, but those waivers – set to expire on May 2 – were not renewed by the United States.

What will this decision mean for the global energy market, and what are the direct cost affects for the price of diesel? Will additional downside price drivers offset the anticipated loss of Iranian supply? Will Iran’s current buyers disregard US sanctions and enable Iranian crude oil to stay on the global market? Learn more about this announcement and what it could mean for both the short-term and long-term outlook for energy costs in your transportation supply chain in this month’s publication.

Geopolitics are Intensifying

The geopolitical risk environment is a main stay component of Breakthrough’s energy price outlook. April proved an active month of geopolitical headlines, placing an imminent level of uncertainty on the world oil market, and therefore on the price of over-the-road diesel. Three main headlines emerged in April, each offering upside oil price risk should the situations escalate:

  1. Iran sanctions: What does this mean for the global supply picture and international trade relations?
  2. Venezuelan politics: The presidential conflict escalated, but how will the potential change in leadership translate into world oil market fundamentals?
  3. Unrest in Libya: Military officials attempted to overtake the western capital of Tripoli, adding another disruption to the nation’s oil industry which is historically unreliable during times of similar discord.

Border conflict between the US and Mexico, and political uncertainty in Argentina and Algeria also possess relativity for the world energy market. The Applied Knowledge Team will discuss these events in greater detail, specifically discussing each story’s relevance to diesel prices and the overarching geopolitical landscape’s weight in the diesel price picture.

This edition of the Breakthrough Advisor publication presents an in-depth diagnosis of the energy market’s most pressing news and data-driven insights concerning shippers’ fuel management strategies. If interested, you can gain further details on everchanging market dynamics and industry trends by signing up for the Breakthrough Advisor Brief or contacting the Applied Knowledge Team directly.

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