The oil market faces a precarious few months. The imposition of U.S. secondary sanctions on Iranian exports on November 5 is the critical factor behind Brent’s rally to more than U.S.$80 a barrel in October. There’s enough supply to meet demand this winter, but the margin for error is worryingly narrow.
After the the implementation of the nuclear deal in January 2016, Iranian production and exports recovered to pre-sanctions levels inside six months. Exports reached a peak of 2.8 million barrels per day in April 2018, including 300,000 barrels per day of condensate. Buyers have come from numerous countries, with the bulk sold into Asia, the Mediterranean and Northwest Europe.
