Crude prices surged by more than 3 percent on Tuesday after the U.S. State Department said it will require companies to cut all oil imports from Iran to zero by November.
The announcement exacerbates concerns about a shortage of oil at a time when Venezuela’s production is in terminal decline and the market is grappling with short-term supply disruptions from Canada and Libya. Last week, OPEC and other producers including Russia agreed to raise output to prevent price spikes.
U.S. West Texas Intermediate crude futures ended Tuesday’s session up $2.45 a barrel, or 3.6 percent, to $70.53, erasing earlier losses and breaking above $70 for the first time since May 25. International benchmark Brent crude was up $1.60, or 2.1 percent, at $76.33 per barrel by 2:29 pm. ET. [,…]
The swings in recent days are a bit surprising, as all of the factors that are being used as the “reason” for the swings are all known data points. We knew that Iran imports were going to zero, and we all had a really good idea that OPEC, Russia and others would increase output to pick up the slack left by Venezuela… Can someone explain to me why the traders react to heavily on this news?