There are some financial analysts who are beginning to worry that the price of crude oil is getting too high and will eventually hinder economic growth. Matt Badiali is one financial advisor who sees the potential for higher oil prices as soon as fall starts. He believes that the main catalyst that will send the price of oil soaring is the situation in Iran. Back in 2015, the United States came to an agreement regarding Iran and its nuclear program. Iran was then able to export its oil and trade. However, the Trump Administration was against the Iran deal. The US plans to place sanctions on Iran if a new deal regarding their nuclear program is not met. The sanctions are going to take effect in November and many analysts believe that the sanctions are going to drive up the price of oil. Matt Badiali estimates that Iran was producing around two million barrels of oil. The largest oil producers will not be able to make up the difference, thus creating a very tight oil market. Venezuela, a major oil producer, has been going through major economic turmoil and has been producing much less oil.
Although Matt Badiali is anticipating higher oil prices, he believes China could play a role in keeping oil prices from rising. China and the US are currently in a trade war. China has an opportunity to undermine any pressure the US may try to inflict on Iran. China imports much of its oil from Iran and strongly opposes the sanctions that the US is trying to impose on Iran. Also, the trade war is creating some fear on Wall Street, as many analysts believe it will push the US into a recession. Eventually, a slowdown in the economy would drive oil prices lower.
Matt Badiali believes that if the US and China are in a trade war, China will do everything to undermine US policy regarding sanctions on Iran. Other countries agree with China for opposing the sanctions and have criticized the United States for terminating the Iran nuclear deal. Matt Badiali feels that China may end up importing more oil from Iran and less from the US if the trade war continues to heat up.