Tensions between the United States and Iran have intensified after the U.S. pulled out of the Iran Nuclear Deal with plans to reapply sanctions to the country. Turkey and China have so far refused to halt imports of Iranian oil, provoking the Trump administration.
Matt Smith, the director of commodity research at ClipperData, spoke to Texas Standard Host Laura Rice on how this tension could affect Texas oil.
“You have to look at [oil] as one big pool of supply,” Smith says. “We could see supply reduced by half a million barrels a day because Iran cannot find buyers for that crude, and that situation would only deteriorate into next year because they may be able to find buyers, their production is going to drop because they will not have access to international materials, skills, etc. That will mean a lesser supply coming onto the market. What that means for U.S. prices is that they will feel the ripple of lower global supply because of the Iranian barrels coming off the market. It’s not going to have a downward effect on U.S. crude and will have an upward effect, if anything.”
What else you’ll hear in this segment:
- What’s the big deal about the Strait of Hormuz?
- What happens next with oil sanctions on Iran?
Written by Haley Butler.