Economics: Oil - When Will The Iran Bubble Burst

(Drivebycuriosity) - Oil prices are on a tear. Brent Crude, the gauge for global oil, climbed around 40% year-to-date (brent). I think that the oil market is in a bubble again.

The oil rally is fueled by speculation that the Iran sanctions will reduce the global oil supply significantly. But the data don`t confirm the rumors. The International Energy Agency reported last  week that the world oil production climbed onto around 100 mb/d. That was 2.6 mb/d higher than a year ago and a new record (oilmarket  ). Last week we also learnt that the US crude oil inventories climbed by 6 million bbl for the week ended Oct. 5 (inventories  ). We also heard that active oil rigs increased by 8 to reach 869 last week (oilprice ). So. oil production in the USA and other countries is already overcompensating the reduced Iran oil deliveries.

It is only a matter of time before the Iran bubble will burst.