The billionaire chief of BlackRock is not that concerned about Iran sanction news, as he points out the large inventories around the globe would offset any reduction in flows. Larry Fink has an optimistic view that there will not be excessive spikes in oil prices in the future.
He points out that the flow from the Islamic Republic of Iran is at a four-year low as exports were hit by US sanctions as result of President Donald Trump administration`s withdrawal from the 2015 Iran nuclear deal in May last year. Looking back at May of last year when Iran was exporting 2.8 million barrels per day, the volume has dropped to 1.4 million barrels per day in March 2019.
But it seems that some of the smart money managers are not concerned as Iran is a smaller player, selling half the amount of crude it sold a year ago, and there are so many countries in the region that can quickly fill the gap. Arab Gulf States, especially Saudi Arabia believe they can easily offset tightening supply form Iran.
Saudi Energy Minister, Khalid al Falih strongly points out that the excess inventories are substantial.
The Saudi oil minister suggested that there is already a lot of inventory on the market that has been drilled and stored. So the chance of a spike higher on lack of product is a very short-term view. Note that when the White House announced the sanction news on Monday, oil prices spiked 3 percent.
So the Saudis have the ability to fill the gap or tightening of Iranian supply but note that the US also is expected to grow inventories by 1.6 million bpd this year, according to the International Energy Agency.
Iran will not even be noticed if its oil exports drop to near zero – global oil prices will remain stable.