Oil has persistently been hitting new levels updating one high after another. The black gold overcame the important psychological mark of $80 per barrel. Last time such prices were seen back in 2014. A large number of factors contributes to growth: a high level of compliance with the terms of the OPEC+ deal by the participants, the supply balance in the market, the decline in inventories and the higher global demand.
In addition, prices are supported by US threats to resume and even increase sanctions pressure on Iran. Donald Trump already announced the US withdrawal from the nuclear agreement with Iran, but the Congress must still approve the sanctions, and it will take time, at least 180 days. Iran is the third largest oil producer in OPEC, imposing sanctions will significantly reduce the exports of the cartel. "It’s too early to say what will happen this time, but we need to find out if other producers can intervene to ensure an orderly flow of oil to the market and to compensate for the disruptions in Iranian exports," the IEA said.
By the way, the agency warns market participants that the high cost of oil can negatively affect growth in demand. It even lowered its forecast for growth in oil demand this year from 1.5 million bpd to 1.4 million bpd. Another reason for the price increase may be Venezuela, where there are already serious disruptions in supplies. According to IEA, "the pace of decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day."
