Crude Oil Supply Falls to Lowest Levels in May Over US Sanctions on Iran
Arslan Butt • 1 min read
OPEC’s crude oil supply is set to fall to its lowest levels in several years after Trump imposed fresh sanctions on Iran. According to a Reuters survey, OPEC’s output increased to 30.17 million bpd in May, but it was still 60,000 bpd less than its output in April.
US imposed fresh sanctions on Iran in November 2018 and announced an end of sanction waivers from May 1, preventing any country from buying Iranian crude. Previously, Iran used to account for oil supply up to 400,000 bpd – the biggest driver in drop in supply in May. US sanctions on Venezuela have also led to a supply drop of 50,000 bpd in May.
Even though Trump has pressured Saudi Arabia to pump more oil to offset the loss of Iranian crude supply in markets, the kingdom continues to voluntarily pump less oil that what OPEC had agreed to do earlier in 2019.
However, even a tightening of oil supply is unable to keep crude oil prices from falling because of the ongoing trade tensions between US and China. Investors are concerned about how the trade war could slow down economic growth worldwide, causing a fall in demand for crude oil.