These Are The Potential Consequences Of Renewing Sanctions For Iran's Oil Importers

Sergio Conner
May 12, 2018

Brent crude oil touched its highest since November 2014 on Wednesday, up $2.19 a barrel, or 2.9% at $77.04 US late in the morning session.

Although the oil market is unlikely to be immediately disrupted by this long-expected move, a number of dynamic reconfigurations to oil flows - and indeed, to the balance of relations and power in the market - may follow over coming months and years.

U.S. re-imposition of oil sanctions will initially impact less than 200,000 barrels per day of crude supplies and less than 500,000 barrels per day of supplies six months after from Iran, S&P Global Platts said, citing a survey conducted with analysts. In a statement late Tuesday, the Saudi energy ministry said was "committed to supporting the stability of oil markets".

Niels Christensen: Well it has been the trend for quite a while since, actually, the beginning of this year and we still have a lot of uncertainties, at least in the short-term.

Sputnik: Who do you think would benefit from this price fluctuation in your view? Chinese crude imports recently hit record highs, and the country will be loath to cut imports from Iran or switch providers in the midst of a tight oil market.

Market watchers generally agree that the outlook for oil prices remains hazy as the health of the oil market is subject to one too many unknowns.

London/Dubai: Opec is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran after the imposition of new U.S. sanctions, four sources familiar with the issue said, saying any loss in supply would take time.

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Saudi Arabia said it would work with other producers to lessen the impact of any shortage in oil supplies.

"We also introduce a second quarter $90 per barrel Brent price target for 2019 and see a risk of $100 per barrel oil next year", Francisco Blanch, head of commodities research at Bank of America Merrill Lynch, wrote in the report. "But I expect the price of North Sea Brent to be closer to $80 than $70 a barrel", Seele said in an interview.

Walking away from the deal means that the United States will likely re-impose sanctions against Iran after 180 days, unless some other agreement is reached before then.

Just how much of Iran's growth in oil production is at risk - and when it could decline - is uncertain.

He argued that even if the deal collapses entirely, the members of Organization of Petroleum Exporting Countries (Opec) can tap some 3.3 million barrels per day of spare capacity to fill any supply shortfall from Iran.

India, the second largest importer of Iranian oil, is unlikely to be immediately affected by USA sanctions. What countries could become key buyers? Richard Nephew, senior research scholar at Columbia University's Center on Global Energy Policy, added that China and India may continue to buy Iranian oil even in the face of USA sanctions, negating some of their impact. What long-term implications could this have?

"The country's gasoline production state is also very good and they can't pressure us in this regard as well", he added.

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