Most market participants are having a hard time explaining why the price of crude oil dropped like a rock during a time when the United States began to enforce sanctions on Iranian exports on Nov. 4 — sanctions centered on the extraordinary demand that the world stop buying Iranian oil (with generous exemptions).

I’d say that a 20% decline in the price of oil in about a month falls into the category of rare events and may not have anything to do with supply, but rather that other driver of prices called demand.

Which country is the largest importer of oil, and therefore the largest driver of crude oil prices on global markets? China. In 2017, China overtook the U.S. as the largest importer of oil, so economic developments in China should be closely monitored by oil traders, as the Chinese economy is likely headed into a massive recession, and not due to the present trade frictions with the Trump administration.

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