11 September 2019 - 11:10Singapore — “Uncertainty” was the buzzword at the crude oil industry’s annual gathering in Asia, but virtually everybody was reluctant to talk about the root cause behind the sector’s discomfort — US President Donald Trump.
The drop in supplies from Iran and Venezuela are the result of Trump imposing sanctions on both countries in thus-far failed attempts to get their leaders to bend to US demands. Meanwhile the threat to global growth from the trade dispute between the US and China was triggered by Trump’s policies. In some ways Trump is to the oil industry what the nefarious Lord Voldemort character is to the Harry Potter series of books — “he who must not be named”.
The industry anticipated that Trump would re-impose sanctions on Iran’s oil industry and expected the loss of Iranian cargoes to be boost prices. But they also incorrectly assumed that the trade dispute would be resolved, because it was in the interests of both the US and China to do so. In effect, the industry has correctly identified that prices are currently in a tug-of-war between supply disruptions such as Iran and Venezuela, and the darkening outlook for global growth.