Since May 2, the United States has formally suspended its crude oil export exemption from Iran in an attempt to impose a total ban on Iranian crude oil exports. 3rd–The United States also announced the strengthening of restrictions on Iran’s nuclear activities.
The analysis argues that U.S. sanctions against Venezuela and OPEC-led production cuts have already caused a shortfall in global crude supply, at a time when the continued decline in Iranian crude oil exports will trigger a shock in the global crude oil market.
Iran’s crude oil exports continue to slide Last May, the United States unilaterally announced its withdrawal from the Iran nuclear deal, restarted economic sanctions against it, and demanded that the countries concerned stop importing Iranian crude oil on November 4, 2018.
Last November, the United States announced additional sanctions against Iran, but allowed the eight largest importers of Iranian crude oil to continue importing limited quantities of crude oil from Iran, including China, Turkey, India, South Korea and Japan.
Previous U.S. sanctions have halved Iran’s daily exports to 1 million barrels, or less, while the suspension of exemptions for Iran’s crude oil exports means the United States will cut Iran’s crude oil exports to 0. An Iranian official familiar with crude oil policy said Iran’s crude oil exports could fall to 700,000 barrels a day, or even as low as 500,000 barrels, from May. Iran’s crude oil exports could remain around 40 to 600,000 barrels a day, an OPEC source said.
Analysts at Energy Aspects expect Iranian crude oil exports to fall to about 600,000 barrels a day from May.
For now, market participants generally believe that Iran’s crude oil exports have fallen from at least 2.5 million barrels a day in April 2018, one months before US president Trump withdrew from the U.S. nuclear deal with Iran. In April, the White House issued a public statement demanding that all Iranian crude buyers must stop importing by May 1 or face sanctions, the Wall Street Journal reported.
The analysis says the White House aims to cut the lifeline of Iran’s annual revenue of $50 billion in crude oil to pressure the Iraqi side to limit its nuclear program and ballistic missile tests. That sparked resentment in Iran, where Iran’s oil minister, Biyang Zangne, told members of Congress that the Trump Administration’s sanctions waiver plan would never be met: “It is impossible for the United States to expect to cut off Iran’s oil exports. We will do our best to break the United States sanctions.
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” Iran is bypassing U.S. sanctions to sell crude oil in the “grey market,” a senior Iranian Oil ministry official said 5th. State media the Islamic Republic of Iran news agency quoted Amir Hussein Zamaninha, deputy minister of oil, as saying Iran “has mobilized all the country’s resources to sell crude oil in the ‘ grey market ‘.”
Zamaniya did not explain the meaning of the “grey market” and the details of the disclosure, including the volume of crude oil exports. Iranian Foreign Minister Javad Zarif told Reuters April 25 that “there is always a way to bypass the sanctions” and that the Iraqi side will make every effort to continue selling crude oil. Zarif declined to disclose the oil sales targets considered by the Iraqi side.
Zamaniya said 5th that the Iraqi side in the “grey market” oil sales “is not smuggling, but to resist illegal sanctions by the United States.” Iran’s oil minister, Zangane, said 1st that Iran had launched a number of new channels to secure oil exports. Mr Zan said oil exports were the most important part of Iran’s oil industry and that Iran might allow private capital to invest in Iranian oil in the future.
Increased uncertainty in crude oil market OPEC secretary General Balquindo said it was impossible to remove Iran completely from the global crude oil market, and the reduction in Iran’s crude oil output would exacerbate the threat to the global crude oil market.
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Balquindo said the OPEC secretariat was in discussions with Iran’s oil ministry about the response. Some OPEC members now face international sanctions. OPEC’s general secretary, Balquindo, said in Tehran 2nd that OPEC would do its utmost to avoid a global “energy crisis.” ‘ We will continue to focus on the goal of avoiding an energy crisis because it could affect the global economy, Balquindo said.
OPEC members have pledged to be united and not to fall back on the chaos they have faced in recent years. Although US President Trump has asked Saudi Arabia to take the lead in increasing oil production to make up for supply shortages caused by U.S. sanctions against Iran, the Saudi energy minister has said the country will not rush to increase crude oil supplies and will continue to comply with a deal to cut production reached by major oil producers late last year, possibly even extending the deal until the end of the year.
That means the Saudis still want to maintain the current state of production cuts. Under the current deal to cut production, OPEC producers and non-OPEC producers, led by Russia, will cut production of 1.2 million barrels of crude oil a day until the end of June this year.
OPEC and its allies will meet in Vienna from June 25 to 26th to discuss the next production plan.
But when it comes to the impact of the situation in Iran on the oil market, Saudi Energy Minister Khalid Falih has said there is no shortage of supply in the world market, there is nothing to worry about.
Multi-country calls for resumption of dialogue
After terminating the oil import exemption, it is theoretically that no country or region has a legal way to trade crude oil with Iran, and it is difficult for any bank to deal with operations involving Iran’s crude oil transactions, and all shipping vessels exported by Iranian crude oil may also be seized by the United States Navy.
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The High Representative of the European Union and the foreign ministers of France, Germany and Britain issued a joint statement on the Iran nuclear deal on the 4th, expressing regret and concern at the United States decision not to grant any countries and regions the exemption to continue importing Iranian crude oil, and expressing concern that the United States should end its exemption from some of Iran’s nuclear non-proliferation projects within the framework The statement said the parties involved in the Iran nuclear deal are committed to maintaining Iranian capital flows and export trade, and are working with relevant third parties to support the Iranian nuclear deal. The EU and Franco-German and British will continue to work with other European partners to maintain legal trade with Iran, particularly through the INSTEX clearing mechanism for trade with the country. In addition, the participants concerned will significantly increase their financial support for the INSTEX clearing mechanism. France, Germany and the United Kingdom issued a joint statement earlier this year announcing the establishment of a INSTEX clearing mechanism for trade with Iran.
The mechanism, which is full of “trade support Tools”, is a payment mechanism operating outside the US-led global financial system, helping European companies bypass unilateral U.S. sanctions against Iran and allow the EU to continue trading with Iran. Over the past year, US sanctions have taken a huge hit on Iran’s economy. According to the International Monetary Fund, inflation in Iran has soared to 40% per cent since the US restarted sanctions against Iraq, and 42,000 of miles has been able to exchange 1 of dollars. The IMF expects Iran’s gross national product (GDP) to continue to decline this year.
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