The US trade wars as well as economic nationalization policies caused severe market volatility in most of 2018. The Trump administration has also withdrawn from the Iran Nuclear deal and saction against Iran 1970s oil crisis. However, the most devastating impact could be an upcoming oil embargo scheduled to take effect on November 4th, 2018.
In 1970, the political turmoil in Iran and growing concern over the Iranian revolution led to an attack in the US embassy and the Iranian rebel took 52 as hostage. As a result, the US president Jimmy carter froze billions of Iranian assets and it led to a massive decline in oil production and, eventually an oil embargo.
Later, in 1978, the oil price was climbed to $55/barrel and in 1979, the oil price skyrocketed to $97/barrel. However, the world observed a terrible fate of the oil price in 1980 when it reached $122/barrel. In 1981, the hostages were released and the priced began to fall.
The actions of recent Trump administration are no less concerning than the acts of Jimmy Carter government and alone the withdrawal from the nuclear deal should be sufficient to start an oil embargo.
The pointy ends for oil price
- US export oil sanction will be enforced against Iran from November 4th and an era of global oil eclipse might have been edging.
- Importers of emerging markets such as under-developed and developing countries might suffer a worse-case scenario from the higher prices.
- As Trump is buckling down, the 1970s oil crisis fear is haunting the market once again.
Daily oil price chart (Crude Oil) (Oil price trends of past 3 months)
To the bottom lines
If we could observe the oil price trend, it would be very clear that oil is going through a sideway move and alongside, it is crawling forward. Right now, it is the time for a downward trend and the trend might not last very long. An oil price rally is certainly on the table and this should be a perfect time to be in a buying position for oil, as it has already tested $77/barrel and there is a significant chance to break above 100s, as the option traders have already placed their money on crude above 100 and Brent above 110.
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Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.