According to the White House, despite sanctions on Iranian oil, the market is well supplied. Saudi Arabia and the UAE, along with the U.S. have stepped in to fill the gaps left by the now-sanctioned Iranian crude. Reporting for Reuters, John Kemp writes that oil traders think differently:
The decision to eliminate all remaining sanctions waivers for Iran’s oil buyers follows a round of top-level diplomatic contacts between the White House and leaders of Saudi Arabia and the United Arab Emirates.
Tougher sanctions are likely contingent on a U.S. understanding that Saudi Arabia and the United Arab Emirates will make up lost Iranian barrels at least one-for-one to keep prices steady.
Senior U.S. policymakers have been anxious to stress tougher sanctions will not reduce the availability of crude or lead to higher crude costs and increased fuel prices for motorists.
Oil traders, however, think differently. Tougher sanctions are seen reducing oil supplies during the second half of the year, leaving the market under-supplied, inventories falling, and prices likely rising.
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