How Much Iranian Oil Can Trump Disrupt?

Daniel Fowler
Мая 11, 2018

Analysts estimate that the new round of sanctions could cut Iran's exports by between 200,000 and 600,000 barrels per day.

They expect West Texas Intermediate, the most commonly cited U.S. contract, to trade $6 below the price of Brent in 2019. "While prices are now rising on Trump's decision to reimpose sanctions on Iran, we may see some limitations to the rally as any lost volumes can be supplied by other producing nations".

Oil extended gains above $71 a barrel as a conflict between Israel and Iran ratcheted up, increasing prospects for tighter global supply after the US renewed sanctions on OPEC's third-largest producer. We do not know the total impact of the sanctions against Iran, how they're going to impact on export of oil from Iran, what other oil-exporting countries are going to do; so as long as we have these uncertainties, I think the upward pressure on oil will continue. "However, his language today [8 May] was more hawkish than expected, emphasizing that the U.S. would re-impose all United States sanctions that were lifted as part of the JCPOA, not just those up for renewal on 12 May", said Nomura Global Markets Research in a note. The move was widely expected, and the White House immediately prepared to sanction Iran and companies that do business there.

"Beyond the 90-180 day window, the outlook is less certain". USA heating oil futures surged to $2.2258 a gallon, the highest since February 2015. The US decision on Iran will also raise fears about increased geopolitical tensions in the Middle East, which would equate to further supply constraints and a further catalyst for oil prices. Saudi Arabia signaled it could make up lost supplies, and Goldman Sachs Group Inc. said there's a chance prices may exceed its forecast.

The Treasury Department said on Tuesday that sanctions targeting Iran's oil trade and energy industry will come with a six-month lag.

"Iran's exports of oil to Asia and Europe will nearly certainly decline later this year and into 2019 as some nations seek alternatives in order to avoid trouble with Washington and as sanctions start to bite", said Sukrit Vijayakar, director of energy consultancy Trifecta.

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In China, the biggest single buyer of Iranian oil, Shanghai crude futures hit their strongest in dollar terms since they were launched in late May, around $73.20 per barrel.

"[Possible] sanctions will increase our costs and cause [implementation of] our projects to last longer, but we are not anxious", Shana quoted Shahnazizadeh as saying.

Both contracts notched their biggest daily percentage gain in a month.

It took almost three years to happen, but oil prices finally did it. Second-half June delivery open-spec naphtha prices closed on Wednesday at $681.50-683.50/tonne CFR Japan, up by $16/tonne from the previous day, according to ICIS data.

Asked if Riyadh would "build a bomb itself" if Tehran does so, Jubeir said: 'If Iran acquires nuclear capability we will do everything we can to do the same'. In theory, some countries could receive waivers from sanctions if they reduce their oil purchases from Iran by some unspecific amount. The deal, which called for the curbing of Iran's nuclear programme, paved the way for the lifting of global sanctions against the country. But paying Iran for the oil India buys would become hard in case European countries join the U.S. and impose financial sanctions and block banking channels, he said.

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