Oil trading has been particularly volatile lately, as concerns mount about threats to both global supplies and demand.
Iran threatened to disrupt the flow of oil through the strait, following the U.S. decision to fully implement sanctions against Tehran. This month, Washington sent bombers to the region, in response to what President Donald Trump described as an increased threat. Rising tensions with Iran also have prompted the U.S. to order all nonessential diplomatic staffer members to leave Iraq.
Still, it’s important to realize that “saber-rattling…is hardly new,” Fraser observed. “The cost of escalating [the situation] too far is high, and that reality has kept tensions from fully boiling over between Saudi [Arabia] and Iran for years.” ‘With the current situation with Iran and the China-U.S. trade issues, the only thing we can forecast with certainty is volatility for oil prices.’ James Williams, WTRG Economics WTRG’s Williams says the dispute “will definitely impact China more than the U.S. It also has the greatest impact on [the Organization of the Petroleum Exporting Countries], as China imports over two-thirds of its oil.”