Deepening tensions between the U.S. and China could upend the energy market.

Fears of a severe economic slowdown, or even a recession are already weighing heavily on the market.  But that could only grow worse, as businesses and consumers. – crushed under the weight of rising prices – cut back on their energy use.

However, things could become far worse if China retaliates again. 

For example, Bank of America Merrill Lynch is warning that China could again retaliate by buying large amounts of oil from Iran.  "A Chinese decision to reinitiate Iran crude purchases could send oil prices into a tailspin," Bank of America said, as quoted by CNN.

Should this happen, the analysts warn crude oil prices could sink by as much as $30 a barrel.

Remember, Iranian oil exports have plummeted, as most countries comply with sanctions.  This has also forced two million barrels of oil per day out of the energy market.  However, China could potentially import up to 1.5 million barrels a day, notes Barron’s – a move that would upend energy markets quickly.

That would easily flood the oil market, and send price screaming lower.

Ian L. Cooper

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