Produced and edited by Jamie Han. Filmed by Petros Gioumpasis, Additional footage: Reuters/Bloomberg
As of today, the United States has reimposed sanctions on Iran's oil industry in an effort to cut off their main source of revenue and drive them back to the negotiating table over a nuclear deal which Donald Trump has described as the worst in history.
The Iran deal was one of the worst and most one-sided transactions the United States has ever entered into.
What's happened so far, though, for the oil price has been interesting, however. A month ago, prices hit a four-year high of $86 a barrel as people panicked about the fact of cutting Iran's exports could leave the market short of supplies. Since then, however, the oil price has fallen by almost 17 per cent, taking it to the cusp of a bear market. The reason for that, which may seem counterintuitive at a time when sanctions are coming into effect, is that the US has put pressure on many of its allies, including Saudi Arabia, to ramp up production to try and fill the gap from Iran.
They've also issued waivers for Iran's oil exports to its countries, which will allow them to take a limited amount of oil for six months, partly to avoid the fears that it could create a shortage in the market and therefore damage the global economy. The big question for the oil price now is just how big the waivers the US have issued are. They've not yet given clarity on how big the size of the cuts they are going to be asking from consumers are going to be, so if that turns out to be smaller than perhaps the market expects, it could put a floor under the oil price.
The second big question for oil markets is whether having pushed Saudi Arabia and other countries to ramp production close to the maximum level they can do in a short space of time, whether or not people in the market are going to start worrying about the lack of spare capacity now left over, in order if there's another supply outage somewhere else, or if we continue to see a greater drop in supplies from countries like Venezuela, whether or not they'll be spare capacity in the market to fill that gap. That may make for very nervous and volatile trading in the coming weeks.