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Concerns over the world’s economy continue to impact oil prices. Today, crude dropped to a low of $67.35, testing the lows after Saudi Arabia’s production cut. However, the bulls were able to stabilize the market and it eventually closed only slightly lower.

However, for the second consecutive day, there was a drop in sales that amounted to the third weekly decrease in four weeks. An overarching issue that contributed to this week’s decline was the mounting proof that Iran is successfully getting their exports into the marketplace.

The notion that Iran is exporting more than initially thought, potentially reaching its maximum potential, clarifies why there is more oil supply in the global market than initially estimated. For those who are optimistic, it suggests that there is limited capacity that can be added to the market in the event of an Iran agreement. Additionally, if Trump wins the presidential election, the US could revert to a more stringent stance towards Iran and decrease the amount of oil being supplied.

The important factor for the future is reducing inventory. The United States selling its Strategic Petroleum Reserve will cease this month and will not resume until 2026. This, combined with decreased oil production in Saudi Arabia from July 1 and increased demand during summer, will cause a deficit in the oil market in the second half of the year. However, this deficit was expected, so it may not have a significant impact. It is likely that we will need to see significant inventory reduction in the US and extensive efforts from China to have a greater effect.

Encouragement to change the situation.

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