Published: Mon, May 14, 2018
Economy | By

Iran Upbeat About Oil Exports Despite Sanction Threat

Iran Upbeat About Oil Exports Despite Sanction Threat

The JCPOA reached by Iran, China, France, Germany, Russia, the United Kingdom, the U.S. and the European Union sets out rigorous mechanisms for monitoring restrictions placed on Iran's nuclear programme, while paving the way for the lifting UN sanctions against the country.

The price of oil is not the only area that will affect the Caribbean, after President Trump's decision to withdraw the US from the Joint Comprehensive Plan of Action (JCPOA) with Iran which was negotiated and signed in 2015 by the US, Britain, France, Russia and China (the five permanent members of the United Nations Security Council) plus Germany. Total of France, which has a big USA presence, signed a $5bn dollar deal with Iran and will be hoping that French government intentions to challenge the United States move at the World Trade Organization may salvage some of that.

One factor that could partially mitigate any shortfall from Iran is soaring USA oil output. "If the situation in the Middle East becomes more unstable, the market will become more concerned about how oil supply will be disrupted".

"We strictly conform with European Union and worldwide laws and regulations, and scrupulously respect any trade restriction that could occur from any potential global sanctions or embargo".

The US Treasury has promised "wind-down" periods of 90 to 180 days to let firms extricate themselves from agreements with Iran and avoid US sanctions announced last night. The reduction is partially the result of hedging in anticipation of President Trump's withdrawal from the Iran deal. Incidentally, the recent rally in crude oil price is more to do with the American President's decision to re-impose sanctions on the Islamic Republic country.

The European Union is mulling action including counter-measures against the United States in a bid to protect firms doing business with Tehran from the threat of sanctions following Donald Trump's withdrawal from the Iran nuclear deal. "Iranian is not the only crude".

To be sure, greater Saudi assertiveness does not mean that the kingdom does not have to tread carefully in potentially seeking to penalize China and others for their potential refusal to go along with Trump's confronting of Iran. Riyadh remains "committed to supporting the stability of oil markets" and will, along with other major oil producers, help "mitigate the impact of any potential supply shortages", Saudi state media quoted the Energy Ministry as saying, according to Bloomberg. There is already a rift within OPEC because of political moves by both Saudi and Iran in Iraq, Israel and other countries in the region.

Several refiners in Asia told Reuters they were already seeking alternatives to supplies from Iran. If sanctions are imposed, Indian companies might have to look for alternate supplies to compensate supplies.

Oil prices rose again today, with WTI Crude up 2.5 per cent in afternoon trading to $70.75 a barrel while Brent Crude climbed 2.4 per cent to $76.6 a barrel. This will add additional pressure on OPEC.

The management at OMCs have indicated that current prices levels are unsustainable and prices are unlikely to rise much from these levels. With higher supplies from alternative suppliers, crude prices are likely to normalise.

"The average family out there can expect to pay about $200 more than they paid last driving season and about $250 more than the 2016 driving season", says Kloza.

Stock markets were also benefiting. Stocks of downstream players corrected around 2-3 percent, and those of upstream companies have risen around 3-4 percent.

Like this: