00:00 Speaker A
Oil prices fell after President Trump told reporters that the killing of protesters in Iran had stopped. According to Bloomberg. Oil prices initially climbed in today’s trading, hitting their highest levels since October amid unrest in the country. Joining me now is Rebecca Badick, senior energy trader at CIBC Private Wealth. Rebecca, nice to meet you.
00:30 Speaker A
So in the oil market, Rebecca, you call it a repricing of geopolitical risk. You said that you emphasized Venezuela and Iran, which are two completely different market reactions. Maybe start here, Rebecca. Explain it to us. What do you mean?
00:54 Rebecca Buddick
So the oil market’s initial reaction to what’s happening in Venezuela is to reprice the extra supply that eventually comes back to the market. Well, there’s a risk that we’ll see an acceleration of investment in the country, which will actually drive down the price of crude oil.
01:21 Rebecca Buddick
So while there’s an event there that’s creating uncertainty, the market is looking at an initial possible supply disruption of 20,000 to 300,000 barrels per day and looking ahead to the longer-term implications of what that means.
01:47 Rebecca Buddick
In Iran, the situation is very different. We are looking at uncertainties that could impact a significant amount of supply in the short term if things escalate. They produce approximately 3.2 million barrels per day,
02:08 Rebecca Buddick
Relative to Venezuela, which produces 900,000 barrels per day, this figure is quite significant. The short-term impact is likely to be supply disruptions rather than acceleration.
02:30 Rebecca Buddick
So while these events all created this huge headline, the oil market responded by seeing Venezuelan crude prices fall, while Iran saw crude prices rise. So it was a very divided response to those two things.
