Consequences of Trump’s measure against Iran’s oil on global market
Tehran, Oil and energy market activists believe that although the antiIranian efforts of the US president Donald Trump in the oil field have a negative impact on foreign exchange earnings and Iranian economy, they will entail adverse consequences in oil markets.
Donald Trump's new decision to cut Iran's oil exports to zero and not to extend the waivers for countries trading with Iran is a measure that can greatly affect the energy market. On the other hand, the Iranian response to the White House effort and its tricks to counteract the US president could also be an indication of the failure of conspiracy of the US Administration.
Senior Iranian officials have repeatedly denounced Trump's illusions of cutting Iran's oil exports as impractical and insisted they would not allow any foreign country to intervene in this matter, and oil exports would continue on the will of Tehran.
Official statistics from oil tankers how that Iran has exported an average of 1.5 million bpd crude oil in recent months. By April 2018, it was 2.5 million bpd prior to the US withdrawal of nuclear deal. According to the Bloomberg news website, the United States had previously allowed eight countries to continue to buy oil from Iran, but the White House's new action will make the Asian, Indian, Chinese, Korean, and Japanese economies are damaged more than other countries. If current oil prices rise much higher than the current level, the national currencies will weaken in oilimporting countries and inflation will increase.
However, media outlets in the West said Iran's oil exports to its top five customers increased in March despite sanctions amounted to the highest level in the last few months. According to Reuters, during this period, Iran exported to its customers 1.7 million barrels of oil per day, which is higher than before. According to activists in the global energy market, Washington's aggressive policies against Tehran, as Trump believes, will not be entirely successful, while the consequences will include the United States, oil consuming countries, and even some producers.
According to the Investment magazine, the US bid to put an end to waivers for Iranian customers will not only affect the energy market, but also its effects go beyond what everyone expects. This action will be effective at the first stage on the supply of oil to the energy market, since the market is now shaken by instability due to political and economic tensions in Venezuela, Libya and Nigeria.
** Saudi promises to Trump
While Trump has strongly counted on Riyadh's announcement of rising oil supplies, but analysts believe the future is ambiguous because Saudi officials say they need to assess the situation and then decide on increasing production.
According to Bloomberg, although Trump has agreed with Saudi Arabia and the United Arab Emirates to compensate for the shortage, the move could create tension between oil producers. The two countries' cooperation with the White House undermines the agreement on production cuts signed by members of the OPEC with Russia last year. The United States has called on its allied producers to replace Iran's oil without respecting this deal.
According to the report, on the first day after the announcement of the decision by Trump, the crude oil price rose by 3%, and the continuation of this rising trend is the response of Saudi Arabia, the UAE and other producers to supply and demand balances.
In a situation where the media spoke of Riyadh's demand for oil prices above $ 80, the country experienced surplus for the first time in the past five years in its foreign trade.
The Arab Weekly website cites Saudi and Emirate's commitment to offset the shortage in the energy market, which Riyadh and Abu Dhabi have underlined their cooperation to replace Iran's oil are in accordance with their demands, and not the orders of the President of the United States.
The Saudi Minister of Oil explicitly announced that the kingdom will decide on increasing production next few weeks. Khalid alFaleh emphasizes that his country considers the current level of supply and does not require an immediate increase in production. Referring to past experiences, the UAE's petroleum minister also said that his country did not increase the production quickly and did not increase supplies unnecessarily.
According to the report, although the United States is not certain that it could bring Iran's oil exports to zero, Saudi Arabia and the Emirates were ready to increase their production to 1.5 million barrels. This action cannot be longterm because it will destroy OPEC's surpass capacity for critical situations.
On the other hand, the International Energy Agency has warned that global economic growth will become more fragile, with a price of $ 80 per barrel. Therefore, producers and consumers should avoid excessive oil prices that are painful to the world.
The Arab analysts, however, advise the UAE and Saudi Arabia to remain indifferent to Tramp pressure and to do the best to secure their interest after assessing market conditions.
Source: Islamic Republic News Agency IRNA