Oil Prices Now Depend on Iranian Response to US Sanctions

A wave of sanctions on Iran snapped back into place this week, giving commodity bulls a reason to believe higher oil prices are in the offing.

While commodity traders are focused on the impact of Iranian oil coming out of circulation, they are missing a greater catalyst that could disrupt global markets, says one expert.

West Texas Intermediate graph

“What I think we really want to be watching over the next couple of weeks is really what happens in terms of the Iranian response to the re-imposition of sanctions,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC’s “Futures Now” on Tuesday.

“Do we see the Iranians, for example, restart their nuclear program? Do we see more aggressive efforts to target ships in key waterways?” Croft continued.

U.S. officials said this week that the renewed sanctions would have a significant impact on the Iranian economy. However, Croft notes that the Iranian government shows little signs of backing down. Iran President Hassan Rouhani previously threatened to block the Strait of Hormuz, a major oil transport artery, if the U.S. intervened in the nation’s exports.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza