Iran oil exports fall before USA sanctions: global banking group

Troy Powers
September 27, 2018

The remaining parties to the 2015 Iran nuclear deal, which curbed Iran's nuclear program in exchange for sanctions relief and from which Trump withdrew the United States in May, agreed on Monday to work to maintain trade with Tehran despite skepticism this is possible as US sanctions to choke off Iranian oil sales resume in November. On Tuesday, Brent rose as high as $82.55, the highest since November 2014.

In a Tuesday speech at the U.N., Trump reiterated calls on OPEC to pump more oil and stop raising prices.

Saudi Energy Minister Khalid al-Falih told CNBC on Sunday that Trump's claim on Twitter last week that OPEC is pushing oil prices higher and higher is "not true".

US officials, including President Donald Trump, are trying to reassure consumers and investors that enough supply will remain in the oil market and have pushed OPEC to raise output. The news was bearish for oil, but some analysts expressed skepticism about the efficiency of the mechanism on the grounds that the US could simply expand the scope of the sanctions to include barter deals between the European Union and Iran.

OPEC, as well as other producers of oil, are now deliberating whether or not to increase their output by 500,000 barrels per day in order to counteract the lessened supply from Iran. 'The US seeks to reduce Iranian oil exports to zero even for a month, but that dream would not come to reality, ' Bijan Zangeneh said on Monday.

U.S. crude inventories rose 1.9 million barrels in the week to September 21, according to U.S. Energy Information Administration (EIA) data.

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Zanganeh said if Trump wanted prices to ease then he had to "stop his unwarranted interference... in the Middle East and not prevent Iran's production and exports".

The price of oil has been steadily going up since the early months of 2017.

The bank's analysts said in a note Tuesday that "another supply catalyst beyond Iran would likely be needed for prices to meaningfully break to the upside".

Most of the potential supply shortfall has already been priced into the contract, Again Capital's Kilduff said.

At the same time, the demand worldwide is reaching 100 million barrels per day for the first time in history. "Trump blames OPEC for what he has created and caused: the rise of the price of oil and disturbance in the market", Zanganeh said.