Oil prices to face a month of mayhem

Plunging Venezuelan crude production; sanctions disrupting Iranian oil exports; Saudi Arabia pushing for even higher prices; North Korea peace talks –– the coming weeks bring an abundance of risks for the oil market. The geopolitical premium has already helped lift crude prices to a three-year high.

IRAN SANCTIONS

Within five days, US President Donald Trump must choose whether to pull out of the Iran nuclear deal and reimpose restrictions on oil shipments from Opec’s third-largest producer. It’s a decision that could remove a big chunk of supply from the market — about 1 million barrels a day under the previous sanctions regime — and risk further escalating regional tensions.

VENEZUELAN ELECTION

A collapsing economy has already taken a huge toll on this South American OPEC member’s oil production. Things could get worse if the US finds cause to question the legitimacy of the presidential election on May 20 and imposes oil sanctions.

NORTH KOREA SUMMIT

The sudden detente between Trump and North Korean leader Kim Jong-Un doesn’t directly affect the oil market, but the stakes are high for a region that’s still the largest source of demand growth. There’s little risk priced in currently and the summit between the two leaders planned for early June would only move the market if it’s a spectacular failure.

A SAUDI SQUEEZE

Saudi Arabia is championing a push to further tighten the market and boost prices. The weeks leading up to the June 22 OPEC meeting could bring more bullish rhetoric from Saudi Minister of Energy and Industry Khalid Al-Falih.