It’s difficult to understand what direction President Trump really wants Oil prices to go. On one side of the coin, his social media feed is flooded with public calls for prices to drop lower but on the other side of the same coin, he has given Oil prices another shot in the arm this morning after reports circulated that the United States will soon end waivers granted to countries importing Oil from Iran.
Oil prices have already marched to fresh 2019 highs on this development and are likely to stretch higher, as this headline adds further to the already tightening supply of Oil in the markets.
The fundamental themes in favour of higher Oil prices are clearly stacking up their dominoes, with OPEC-led supply cuts, geopolitical tensions in Libya and possible sanctions on Venezuela all fueling concerns over further supply disruptions. With the US removing sanction exemptions at a time where Oil markets are not only tight but extremely sensitive to price shocks, this news has simply added another domino to a stack that has already sharply piled up to point north.
The truth of the matter remains that what happens with Oil prices has become a game of heads and tails with Trump, and the coin has dropped today in favour of more gains for Oil.
While it is likely still far too early and generously optimistic to predict Oil trading back towards $100, WTI looks set to attempt a potential target of $70 if concerns over tight supply in the global Oil markets remain a major theme persuading more buyers to enter positions.