Oil prices are likely to rise as traders worry that US sanctions against major oil producer Iran will lead to a tighter market towards the end of the year.
“Overall, there is a fear of shortage or insufficiency of supply,” International oil and energy consultant Manouchehr Takin, an Iranian based in London, told New Europe by phone on September 6. “It is on the up side. In the last two days it fell by $2 on a short-term basis. But I think overall it would recover again. By how much, would it go up to $80? I would not be surprised, but I wouldn’t like to make a guess.”
Oil prices fell on September 7 as a rise in stocks of refined petroleum products offset a sharp decline in US crude inventories to the lowest level since 2015, Reuters reported. Brent crude futures were down $0.34 cents to $76.16 a barrel. US West Texas Intermediate (WTI) crude futures slipped $0.64 cents to $67.13 per barrel, according to the news agency.
“There is a concern for the supply side that it may not be able to maintain the demand, which is supposed to grow, and overall I think it makes the price go up. But on short-term basis daily, weekly we may get a high level or low level of inventories in the United States for crude and for gasoline so these do have an impact,” Takin said. “There is still prospect of strong strength for demand for oil,” Takin said. For the next few years, demand is going to grow. China, for example, has slowed down its growth, but it’s still significant.”
On the supply side, Venezuela’s oil industry is in a very difficult situation, according to Takin, while Libya’s oil exports are up and down as there have been some improvements to the security situation, but clashes between various militia groups continue.
Turning to his own country – Iran, Takin said the re-imposition of US sanctions by US President Donald J Trump against consumers of Iranian oil would drive oil prices higher. “Iran is under the pressure of sanctions by the President of the United States,” he said, adding that the US is forcing companies not to buy Iranian oil and the US Treasury Department is limiting financial transactions related to Iran.
“Iran’s oil exports are 2.5-2.6 million barrels per day,” Takin said. “Europe wants itself wants to buy oil from Iran and hasn’t imposed sanction so Iranian exports shouldn’t fall by more than one million barrels per day and Iranian exports should be around 1.5 million barrels per day at least,” he added.
The EU is fully committed to the continued, full and effective implementation of the JCPOA, as long as Iran also respects its nuclear-related commitments, an EU spokesperson told New Europe late last month, referring to the Joint Comprehensive Plan of Action known commonly as the Iran nuclear deal or Iran deal.
“In reaction to the re-imposition of US sanctions on Iran, the EU has updated its Blocking Statute, which entered into force on August 7 to mitigate their impact on the interests of EU companies doing legitimate business in Iran,” the spokesperson said.
Takin, however, told New Europe that the Commission’s announcements are not taken seriously by the European companies, which are are now refusing to go to Iran.
“In spite of the European Commission, the European Union supporting them through these various mechanisms, many of these companies like Total have major operations in the United States and they don’t want to get entangled into fights, legal disputes in the United States despite the support of the Commission,” Takin said, adding that the US is a big market for the oil industry.
“The oil companies, service companies, they don’t want to lose that. They all want to be present in the United States. When they have to choose between Iran and the United States, unfortunately, they take a sort of more conservative side and try to balance the two and take the option to be a good boy in the books of the United States,” added Takin.
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