India Yet To Take A Decision On Iran Oil Imports

Daniel Fowler
July 11, 2018

Iran's Opec governor Hossein Kazempour Ardebili was quoted in June as saying that oil prices could jump to $140 a barrel due to the USA sanctions against the country and Venezuela. This statement comes in the wake of fresh sanctions on Iran after US President Donald Trump made a decision to pull out of the nuclear deal with Iran.

Meanwhile, North America has enough fossil fuels to last us for "generations", but government policies often stand in the way of exploiting these resources.

Iran, OPEC's third-largest producer, is facing USA sanctions on its oil exports prompting some buyers to cut purchases.

USA gasoline prices are at a four-year-high this year as a result of the higher price of crude.

After pulling out of the Iran Nuclear Deal, the USA has asked India to stop importing oil from Iran. "For now, the uncertainty around U.S. government policy is leading to lower exports and an increase in Iranian oil in floating storage", wrote Francisco Blanch, BofAML head of global commodities and derivatives research.

Brent, the global benchmark, is now trading at around $77 a barrel, up more than 25 per cent this year.

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The administration has not been clear about whether sanctions will apply just to crude or will include condensates ("Briefing with an Iran diplomacy update", State Department, July 2).

US West Texas Intermediate crude futures ended 21 cents lower at $65.74 a barrel. "As such, we believe that a sustained period of Brent above $80 and $75 for WTI will lead to demand destruction becoming more likely, through a combination of enhanced efficiency and a slowdown in the global economy", analysts said.

The analysts estimate that every million barrel per day shift in supply and demand balances would push oil prices by $US17 a barrel on average. The US rig count, an early indicator of future output, was up by five in the week to July 6, according to General Electric Co's Baker Hughes energy services firm.

The US rig count, an early indicator of future output, is much higher than a year ago when 763 rigs were active as energy companies have been ramping up production. Iran also accused Trump of being the reason for the surge in oil prices through his sanctions on Venezuela and Iran, both members of OPEC.

The current all-time United States annual output peak was in 1970 at 9.6 million bpd, according to federal energy data.

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