Volatility in the oil markets

With a renewed push for sanctions against Iran and looming trade wars, oil prices have been slowly but surely creeping upwards when looking at the long-term trends despite recent weeks of decline. Increased global supply and a – thus far – relatively quiet hurricane season has kept production steady and helped keep oil prices low, however, as the US administration takes aim at Iran and the threat of sanctions becomes real, analysts fear for a slowdown in global supply without sufficient alternative capacity to immediately fill the void.
Increased prices will lead to more productivity in high-cost fields but this will not be enough to offset a potential shortfall should Iran’s capacity of 2.5 million barrels per day no longer be available on the world market. The market is on track to dealing with under-supply and dwindling spare capacity.
Longer term, the threat of trade disruptions and increased tariffs could lead to an overall slowdown of economic growth which will have its impact on global energy markets as a result, but also acting as a catalyst with increasing costs adding to inflated tariff-laden goods flows.
Another factor at play in the energy supply markets right now is a labour dispute that is threatening to slow down or cut production at three oil and gas rigs in the north sea, directly influencing the supply market in Northern and Western Europe.
The long, hot summer has kept energy demand in check for much of Europe, but with winter approaching demand is set to increase steadily in the next few months.