Commodities Corner: Why oil prices are plunging despite U.S. sanctions on Iran’s energy sector

The oil market has had nearly six months to assess the possible effect of U.S. sanctions on Iranian oil exports. Surprisingly, the prospect of significantly tighter global supplies has resulted in lower prices.

President Donald Trump announced on May 8 that he would end the participation of the U.S. in the Joint Comprehensive Plan of Action, a 2015 pact aimed at curbing Iran’s nuclear activities, signed by Tehran, the five permanent members of the United Nations Security Council, and the European Union.

That set the U.S. on a path to reimpose sanctions on Iranian petroleum after a 180-day wind-down period for entities to end their dealings with the country’s energy sector.

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