U.S. President Donald Trump said in a presidential memorandum that he had determined there was sufficient supply of petroleum and petroleum products from nations other than Iran to permit a reduction in purchases from that country.
The memorandum, addressing the secretaries of State, Treasury and Energy, comes days ahead of the administration's renewed sanctions on Iranian oil exports, planned to come into effect on November 5, Reuters recalls.
Trump said he will continue to monitor the situation.
The executive vice-president of NewTech Services, professor of the Gubkin Russian State University of Oil and Gas, Valery Bessel, speaking to Vestnik Kavkaza, noted that indeed, the market will be able to compensate for the loss of Iranian supplies in the medium term. "Iranian oil production exceeds 200 million tons per year, which is 5% of global production. Only oil supplies from the Persian Gulf countries can compensate it, since we are not able to increase production that much so quickly," he said.
"Nevertheless, a substantial deficit will still be created for some time, and given the current situation on the oil market, this will only be good, because the price of oil will rise. Moreover, Iran is a country that has the world's first hydrocarbon reserves raw materials, and the fact that America takes him out of the game surprises me. First of all, it will affect the economies of Europe and China, because more expensive energy makes the economy less efficient," Valery Bessel pointed out.
A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, confirmed that the market will restore the level of supply eventually. "Production is growing, including in the United States, which means that oil not bought by Americans goes to other countries. Saudi Arabia can significantly increase production. But here is another question - how will it affect the market and the OPEC + format? If the Saudis say they are ready to replace Iran’s volumes in the market, which only requires the OPEC+ meeting to increase the Saudi quota, Iran will say that they just want to make money on the sanctions and withdraw from the deal. It may cause panic in the market, oil prices will fall, so actions should be very cautious," he pointed out.
"So that Iran will not be offended, Russia is holding negotiations with it, promising to help create a tool to bypass American sanctions along with Europe and China. It is important for us to demonstrate some concern for Iran and to ensure the preservation of the OPEC+ format. Also Moscow needs it as an experience of creating ways to circumvent sanctions, because we also may need it in the future,” Igor Yushkov predicts.
"We must also understand that Iran will not withdraw from the market completely. Exports will decline to 0.7-0.8 million barrels per day, but will be continued with the use of quasi-legal schemes, so the total loss of Iranian oil will not happen," the leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation concluded.
