As US sanctions take effect against Iranian oil, the world is waiting to see how the market will react; for months, analysts have speculated about a potential supply crunch.
But with eight waivers granted to countries reportedly including Turkey, South Korea, Taiwan, India and China, fears have been tempered.
As a result, Brent crude dipped to $72.41 per barrel (as of writing), down from its four-year peak of $86 per barrel in early October. Some countries which had lowered (or eliminated) purchases of Iran's oil, like China's CNPC and Sinopec, would be able to resume imports, so in the short-term that may contribute to higher export numbers.
The terms of the waivers are still unclear, as it will set a volume limit and will reportedly place payments to Iran in escrow to apply more financial pressure on the country. While the US government wants to pressure Iran, it also needs to keep oil prices low.
US President Donald Trump has been notably critical of OPEC and has pressured it to increase supply to offset cuts due to sanctions. ADNOC announced yesterday that it plans to raise oil production capacity from its current 3mn bpd to 4mn bpd by the end of 2020, and Saudi Arabia has said the country has spare capacity of 1.3mn bpd. Negotiations betwen Kuwait and Saudi Arabia could further unlock 500,000 bpd of production in the Neutral Zone.