Oil market on alert as Iran sanctions hit

LONDON: US sanctions against importers of Iranian oil threaten the crude oil market’s precarious balance and risk surging prices, all under Saudi Arabia’s watchful gaze, according to experts.

“In the next weeks all eyes will be on Iranian exports, whether there will be some cheating around US sanctions, and on how quickly production will fall,” said Riccardo Fabiani, an analyst for Energy Aspects.

The US will from Monday target buyers of Iranian oil in order to deprive Tehran of its main source of income.

Going after Iran’s oil money will hit Tehran where it hurts, but it also means hitting a major pillar of the global oil market — Iran is the OPEC cartel’s third-largest producer — with major consequences for world supply.

Iran exported the equivalent of 2.5 million barrels a day in April, before the announcement of sanctions turned buyers away.

“Even if the United States grants exemptions, Washington will demand that the volume imported from Iran be significantly reduced,” said UBS analyst Giovanni Staunovo, who expects prices to rise.

However, oil prices have fallen by nearly $15 in less than a month, after peaking in early October at their highest level in two and a half years, with a barrel of Brent at over $85.

Part of the explanation lies in the ambiguous position of the US, which initially insisted that the sanctions were designed to reduce Iranian exports to zero barrels, but has since has softened its position.

Secretary of State Mike Pompeo on Friday announced exemptions for eight countries, without naming them.

- Advertisement -
- Advertisement -

Must Read

Toyota increases price of Corolla Altis 1.8

LAHORE: Toyota Indus Motors has announced a price increase of Rs 370,000 for its Corolla Altis 1.8. The 7% increase in price is a...