The US sanctions imposed on Iran are taking Iran's oil supply out of the market, and upheaval in Venezuela is disrupting supplies globally, driving oil prices up. This is causing investors across markets anxiety over growth - supply bottlenecks would be a brake on economic activity across geographies, and the EU, India and China have all grown dependent on Iran oil after sanctions had been lifted. Reliance Industries (RIL) owner of the world's biggest refining complex, already plans to halt oil imports from Iran, two sources familiar with the matter said this week, in a sign that new U.S. sanctions are forcing buyers to shun oil purchases from Tehran.
The US Energy Secretary Rick Perry recently said that the new deal between OPEC and Non-OPEC countries to raise production may not be sufficient to relieve supply constraint stress in global oil markets, Saudi Arabia is reportedly planning to pump a "record amount of crude" in July, embarking on one of its biggest-ever export surges to cool down oil prices.
What does this mean for the oil price trendline? Goldman Sachs estimates that US shale production is not yet sufficient to meet the oil shortfall, due to process bottlenecks, and Algeria and Venezuela's global oil supplies will continue to fall, putting serious upward pressure on oil prices.