FXStreet (Delhi) – Research Team at BBH, suggests that before the tensions rose between Saudi Arabia and Iran, there were four big developments in the oil market at the end of last year. Key Quotes “First, not only did OPEC fail to agree to cut output to support prices, but it also failed to provide any quota. Its failure to agree on a new General Secretary has also left the impression of a cartel in disarray. Second, as part of an omnibus fiscal bill, the ban on US crude oil exports will be lifted. Third, the ban on Iraqi oil sales will also be lifted, it appears, as early as the middle of this month. Fourth, thus far, at least, it has been an unusually warm winter in most of the US. This reduces heating oil needs. On the other hand, flooding in the Midwest is threatening pipelines, likely adding to inventories. Now, the New Year has begun with tensions rising between Saudi Arabia and Iran. The market was vulnerable to a short squeeze, but it remains to be seen if this has run its course already. The flooding is likely to prove a temporary disruption. More seasonal weather is forecast in around ten days. The export of US crude is likely to be much less than many seem to anticipate. There are long-term contracts. US shale is not typically the low-cost producer, and then transportation and storage costs need to be taken in account. Lastly, the new supply of Iranian oil has long been anticipated. The market may be prone to "sell the rumor, buy the fact" type of activity. The headwinds on emerging markets looks set to continue. Countries with compromised political leadership in addition to economic challenges may be particularly vulnerable. A lurch to the right in Poland, following the national election, and new finance ministers in South Africa and Brazil at particularly nerve-wrenching times are the most recent highlights. With fundamentals weakening even as the Fed starts its tightening cycle, many countries in EM will remain under pressure this year. Ratings downgrades are likely to continue for the weaker EM credits.” For more information, read our latest forex news.