The oil price has somewhat stabilized today after devastating losses over the past few days on the back of words from US President Donald Trump threatened to increase tensions between the United States and Iran.
Iranian boats have been trolling US war ships in the Persian Gulf which Trump claims is a provocation and has given the all clear for the US warships to launch an attack on the Iranian boats if the trouble persists.
“I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea,” Mr Trump said in a tweet.
Trump’s threat towards Iran is only expected to give oil a short term boost and the massive oversupply is likely to come to the forefront again in the next few days and some analysts believe that it is only a matter of time before all of the world’s oil storage facilities are full and the only way to avert this is by implementing further production cuts on a massive scale.
“Traders have exhausted their ‘hope storage’ and have nothing else to count on. Prices can go to unprecedented low levels even for Brent as, unless there are further cuts announced, storage capacity will just not be enough.” said Bjørnar Tonhaugen, the head of oil markets at Rystad Energy
“Unless there was “a massive shock” such as oil well shutdowns equivalent to cutting millions of barrels from global production or an earlier than expected lifting of lockdown measures, oil may soon be “cheaper than a latte”. He added.