Oil prices have seen an increased volatility over the past month, in much part due to both the increased fighting in the Middle East, as well as the impending nuclear deal between Iran and the U.S.
Just yesterday, oil prices saw an increase after reports of Iran seizing a cargo ship that was initially reported as being an American vessel. The vessel in question, was seized after encroaching on Iranian waters, as reported by the Al Arabiya news station. In response to this, the U.S. sent a destroyer and a fighter jet to monitor the situation.
Last week, the oil prices actually dropped slightly on the 21st, after news of Saudi Arabia ending its 3 week military operation in Yemen, where there is a civil war going on.
John Kilduff, partner at New York energy hedge fund Again Capital stated that “Tensions are so high within the region that with the impending Iran-U.S. nuclear deal that any event implied to be U.S. linked has an immediate effect on oil prices.”
With this increased volatility in oil prices, expect to see the price of oil rise in the coming months even more than expected. Crude oil prices have already seen a significant price recovery because of the expectation of lowered U.S. production, coupled with a reduction in stockpiles; the upcoming Iran-U.S. nuclear deal, along with the increased tension in the region, will only drive up the price of oil faster.
– Taylor Percy