Oil prices rose by more than 1 percent on Monday, lifted by optimism that talks could soon resolve the trade war between the United States and China, while supply cuts by major producers also supported the market.
The Gulf Coast is being battered by strong winds and heavy rains courtesy of Tropical Storm Gordon, which hit the Louisiana-Alabama-Mississippi coastline Tuesday night. As the storm approached land, the winds increased speeds and threatened to be categorized as a fully-fledged hurricane. Meteorologists are predicting up to 1 foot of rain and inland flooding from Mississippi to Arkansas.
News was released this week announcing that the U.S. would be reinstating sanctions against Iran, specifically the Iranian government’s purchase of United States Currency (Dollar), Tehran’s trade in gold, other precious metals, and its automotive industry. President Trump stated as well that if Iran didn’t comply with the reinstatement of the first wave of sanctions that his administration would look into targeting Iran’s port industry as well as its energy shipping and ship building industries. These second wave of sanctions could ultimately have an impact on global supply as well as the worlds spare capacity cushion of oil. Sanctions against Iranian Oil will impact another player in the trade war against the U.S., China. China is the biggest buyer of Iranian crude oil and with Trump and his administration exchanging tariff blows back and forth it will be a test of time to see how long China will resist communicating with President Trump and the United States.
There’s been a lot of talk about the U.S. increasing its domestic crude oil production for the sake of exportation, but where exactly is that crude oil being shipped to? A large portion of the exports will be going to the world’s fifth-largest oil importer, South Korea. South Korean imports of U.S. crude are expected to hit all-time highs in September and October, with 6 million barrels coming in each month.
Early in 2018, United States crude oil production was around 9.492 million barrels per day. Since that time, U.S. crude output has remained above the 10 million barrel a day mark and currently stands around 10.7 million over the last month. The rapid increase in U.S. production is due to the thriving shale industry. However, there are some concerns over the Permian Basin, the United States largest shale region, with limited pipeline transportation.