In a word: ‘No’. While the Kingdom announced it would turn on the spigot in case the Iranians turn theirs off, that just won’t be enough to stave off higher oil prices.
There has actually been little impact on global oil supply because of the tougher sanctions on Iran. The US market is well supplied – enough oil in storage tanks to cover 57.5 days of demand.
Just tell that to the speculators on Wall St. Goldman Sachs says that heavy speculation does have an effect on oil prices. In fact,
Goldman’s oil analyst wrote in a note last month that every million barrel equivalent of oil futures that was net long the market adds 10 cents to the price of oil. The market is currently net long US benchmark crude, or WTI, by 258,406 contracts which is equivalent to 258 million barrels of oil. At 10 cents per every million barrels, that would mean speculation is currently adding $25.80 to every barrel of oil — without the excess speculation, oil would trade at around $81.52.
Which way do you see oil prices going?