Mexico: Oil Prices sold off from the high's because of concerns of increased production from Saudi Arabia and Russia, but looking at the EIA data the biggest culprit of increased exports has been Mexico. The big question will be with the newly elected Lopez Obrador (AMLO) is will he dial back the recent energy reforms? It will be important to watch going forward if the dramatic increase in imports from Mexico will continue in the US, or if its simply a two week aberration.
Iraq: The other big event ongoing internationally are the ongoing protest in Iraq. Protest began after Iran cut off the electricity to parts of Southern Iraq. So far there has been zero disruption to oil production, with protesters peacefully gathering outside the fences of international oil companies production facilities.
Taking a step back: Iran is saying that they suspended electricity service to Iraq because of unpaid dues. While this is plausible, recent statements by Iranian leadership may point to another reason. Iran's Supreme Leader, Khameni, defended a statement made by Iranian President Rouhani that said Iran would block Gulf oil exports, if they were not able to export their own due to US sanctions. Both leaders are most likely referring to Iran's ability to block the Strait of Hormuz. Iran's cutting of electricity in Iraq's most oil rich region could be an attempt to limit oil production, and a sign of future meddling in the country where they have large political influence.
What's next for Iran: US Secretary Mnuchin made comments saying they were willing to work with countries on exemptions to Iranian oil sanctions, but South Korea has already suspended its Iranian oil imports and many other countries are making similar plans to do so.
Hopes by many, including some US officials hoping to keep a lid on oil prices, that China would step in as the major buyer of Iranian oil exports may be premature. A recent trip by Chinese Premiere XI to the United Arab Emirates shows that the Gulf alliance may be attempting to box Iran in. If this is the case, the likelihood that Iran does not respond in some way to limit GCC oil exports is slim to none, the easiest target being Iraq.