This week oil starts off on a positive note. The prices for crude oil are on the rise for several different reasons that can be summed as “decreasing supply.”
First of all, in the United States we have a decreasing number of active oil rigs. Although for much of the oil oversupply crisis in the past four years the United States kept increasing supply, contrary to what OPEC was trying to do, now they have relaxed and have shown lower reserves and lower drilling activity over the last few weeks. This has naturally helped boost oil prices.
Another factor in pushing the price of oil upward are the heavy sanctions against Iran. They are set to begin in November, so Iranian exports are already winding down. Even though many countries advised the United States not to dissolve the nuclear deal with Iran and disagreed with President Trump when he did so, in reality trade with the US is more important to most than trade with Iran, and the time has come for picking sides.
The Brent crude today is trading near $77.92, while the light crude is at $68.45.
