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With oil prices floating around a near 52-week high, there isn’t a lot
of ready supply just floating around, and the market is increasingly
sensitive to any indication that availability could be further cut by US
government action.

Unfortunately, this matters because the Trump Administration is very interested in taking actions that would greatly reduce the amount of oil, which they are already limiting, that is coming out of Iran and Venezuela.

The administration is following what seems to be usual US sanctions
reasoning, which is that if the United States has a problem with that
country, they aren’t allowed to sell oil anymore, ad woe betide anyone
caught buying that oil.

In early May, the waivers the US gave to some nations to keep buying
Iranian oil are set to expire, and the administration is talking up the
idea of renewing less of them, or potentially none of them, with the
ultimate goal of “exports to zero” for Iran.

With Iran exporting roughly a million barrels of oil a day, however,
that threatens a massive disruption on the global markets, fueling a
price hike everywhere, and potentially giving the administration the
political headache of rising gas prices within the US.

Officials would blame a price hike on Iran, naturally, but despite all
the rhetoric, the rest of OPEC simply isn’t in a position to make up the
difference, nor necessarily has the inclination to do so. The US making
dictating global oil commerce a centerpiece of their foreign policy is
simply running up against practical limitations, as they can only
control supply, and not demand.

Last 5 posts by Jason Ditz