Crude Oil is one of the most important commodity in the world. It powers everything that we use every day. Without oil, big agricultural producers would not be able to produce the food we eat in large scale. Local and international transport would be impossible.
Crude oil is produced by a small group of countries, which include the United States, Saudi Arabia, and Russia. The biggest oil producers have formed an organization known as OPEC. This is an organization that controls the output of the crude oil.
An increase in oil production leads to lower prices. Therefore, traders look at the natural and artificial things that could affect the oil production. For example, political uncertainty tends to affect the production, refining, and transportation of oil. Also, a major hurricane in the US can affect the level of output as refineries shut down for safety.
This week, the US will likely announce plans to exit the Iran deal. This was a deal signed under Obama to prevent Iran from acquiring nuclear weapons.
The exit from the deal will introduce new sanctions on the country. The new sanctions will block Iran from exporting crude oil. Today, Iran exports more than 6.5 million barrels of oil every day.
This, in addition to the ongoing tensions in Venezuela lifted WTI crude oil to above $70. This is the highest level since 2014.