A wave of sanctions on Iran snapped back into place this week, giving commodity bulls a reason to believe higher oil prices are in the offing.
While commodity traders are focused on the impact of Iranian oil coming out of circulation, they are missing a greater catalyst that could disrupt global markets, says one expert.
“What I think we really want to be watching over the next couple of weeks is really what happens in terms of the Iranian response to the re-imposition of sanctions,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC’s “Futures Now” on Tuesday.
“Do we see the Iranians, for example, restart their nuclear program? Do we see more aggressive efforts to target ships in key waterways?” Croft continued.
U.S. officials said this week that the renewed sanctions would have a significant impact on the Iranian economy. However, Croft notes that the Iranian government shows little signs of backing down. Iran President Hassan Rouhani previously threatened to block the Strait of Hormuz, a major oil transport artery, if the U.S. intervened in the nation’s exports.