The Coming Increase in Oil Prices

Recently several events have, in my mind, made a rise in oil prices increasingly likely. First and foremost: Iran will be sanctioned by the US and the sanctions will take effect in November. Geopolitical Futures has already reported a decline in Iranian oil production from 1,6 million barrels per day (mbd) in Spetember to 1,1 mbd in October. To give some perspective, a barrel in an oil context is 159 litres. A decline of half a million barrels per day is very significant. At the same time Venezuela is struggling under Nicolás Maduro's rule which has produced awful living standards and tens of thousands fleeing to neighbouring coutries which can't be good for oil production. Furthermore the Organisation of Petroleum Exporting Countries (OPEC) has over the summer found allies in other oil exporters united in their goal to make the oil price stable at an acceptable level. This new OPEC+ has according to Forbes control of 55% of global oil supplies. In short the cards are stacked in favour of higher oil prices, the real question is if this will hurt growth or speed up the advent of the next recession.