Crude oil analysis from Stratton Markets
The US prepared a new set of sanctions against Iran, targeting the sales of one of the most traded assets in the world - Crude Oil. The black gold is also the most liquid commodity from the US. Recently, it became the subject of many controversies. But what does this mean, and why should you care about the latest news on the Iran oil ban?
In the past 35 years the US and some EU countries, have imposed sanctions against Iran. The goals were various, from attempts to limit political and military development, sponsor terrorism, or oil production and exports related. The restrictions extended to the most recent agreement regarding Iran's nuclear program, or to curbing the sales of oil and petrochemical products.
In late 2011, Oil exports represented 20% of Iran's GDP, and about 50% of the Iranian government's income. By the beginning of 2015, largely due to the US imposed sanctions, Iran's economy lost about $27.13 billion, and was on course to produce smaller quantities of crude oil.
New US sanctions installed after a two-year break
On the 8th of May, this year, the US left the "Joint Comprehensive Plan of Action" (JCPOA), that had the purpose of allowing Iran to conduct nuclear activities, as long as it could prove that the nuclear material was used for peaceful purposes.
The JCPOA became effective during the presidency of Barack Obama, this way bringing an end to US restrictions against Iran. Trump's decision to withdraw from the agreement, made way for more restrictions, and caused the Crude Oil to react aggressively and lose about $3.
Three months later, the US installed the first of two rounds of restrictions over Iran. It refers to the purchase or trade of US dollars, precious metals and auto parts, commercial passenger aircraft - or related parts and services.
However, since the restrictions did not regard Oil production, trading or other oil-related matters, the price of the black gold remained stable, having intraday movements of about $1.
The Markets Now Eye the November Sanctions
The second part of the 2018 US sanctions against Iran, will go in force on the 4th of November. The new round of restrictions specifically refer to the sales of oil and petrochemical products.
Since US pulled out from the JCPOA agreement, the Crude Oil price became increasingly more volatile, on the 8th of May alone having fluctuated as much as $3 during the intraday trading session.
When the new sanctions will become effective, what do you think will happen to the markets? Will the news only impact the Oil, or does it have the potential to extend on other assets? These are certainly some questions worth answering before taking the decision to trade on major events like the US sanctions against Iran.
And always remember: CFDs are complex instruments that come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts, lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
This article was submitted by Stratton Markets.
