28 Mar 2024
Thursday 9 August 2018 - 15:32
Story Code : 315204

Iran oil clients trying to circumvent sanctions, avoid high oil prices



Sputnik - Many Iranian energy customers have begun circumventing US sanctions as oil prices are expected to increase due to unilateral US sanctions. Analysts have also warned that stymying Iranian oil exports could jeopardise the already fragile international oil market.




The European Union and other Iranian oil clients have reacted toUS president Donald Trumpsreimposition ofsanctionslast Monday byfinding ways tomitigate their secondary effects oninternational oil markets.
Several EU foreign ministers alongwith High Representative Frederica Mogherini have issued a joint statement onMonday condemning American sanctions and expressing their commitment toupholding the2015 Joint Comprehensive Plan ofAction (JCPOA), also known asthe Iran deal.


The remaining parties tothe JCPOA have committed towork on, inter alia, the preservation and maintenance ofeffective financial channels withIran, and the continuation ofIran's export ofoil and gas, [including] withthird countries interested insupporting the JCPOA and maintaining economic relations withIran. These efforts will be intensified and reviewed atMinisterial level inthe coming weeks, the statementsaid.


The EU also plans toimplement ablocking statuteinorder toretain access toIranian oil markets, which it needs todiversify its own energy consumption needs bybarring European companies fromcomplying withUS sanctions.


Many analysts have speculated that motions likethese are essential tostabilising oil prices, asany major disruptions emanating fromUS foreign policy will push them upto $90 and beyond.


"As we go more towardsthe fourth quarter, that's when we really see the risk ofprices going well intothe 80s and potentially even intothe 90s butvery critical is how much Iranian production we lose, Energy Aspects chief oil analyst Amrita Sen said asquoted byCNBC.


Following its May 8 withdrawal fromthe JCPOA, the Trump administration has tried tolimit Irans access tooil and gas markets bylimiting its productive capacity, withminimal success.


However, tomake upfor the inevitable shortfalls inoil production, Trump began topublicly rely onon Gulf heavyweight Saudi Arabia toincrease production, which has proved difficult thus far.


TrumptweetedJune 30 that he had spoken toSaudi king Mohammad bin Salman toincrease oil production toroughly 2 billion barrels per day inorder tomake upfor shortfalls fromIran and Venezuela, also due toUS sanctions.


Despite this, Brent crude prices haverisensteadily sincethe start ofAugust,moving from $72.30 to $74.27 per barrel. Prices hovered around $50 atthe start of2018 and have risen dramatically.


Some analysts have berated the president forhis wishful thinking.You cannot order 2 million barrels likeordering a coffee somewhere, Porta Advisors partner Beat Wittman told the media.


When asked abouthow the US plans tonegotiate the sunset period ofthe JCPoA, Director ofPolicy Planning Brian Hooktoldreporters March 21:


We where we have agreement, we are capturing the agreement, and where we have differences, we are working tonarrow them tosee if we can reach an agreement. [We] have had very constructive meetings and we are (inaudible) towardreaching an agreement, and well see.


Iranian foreign minister Javad Zarif tweeted, [The] Trump Administration wants the world tobelieve it's concerned aboutthe Iranian people. Yet the very first sanctions it reimposed have canceled licenses forsales of200+ passenger jets underabsurd pretexts, endangering ordinary Iranians. US hypocrisy knows no bounds.

Despite the looming sanctions, Iran boasted Tuesday that its production capacities far exceeded expectations sincethe Iranian calendar began March 21st.
MOGPC CEO Jahangir Pourhang said the company supplied 563,000 barrels per day ofoil duringthe three months which was 101% ofits average production, SHANA news agencyreported.


National Iranian South Oil Company (NISOC)CEO Bijan Alipour andMANPA group directorMojtaba Gharavihave alsoinkedseveral deals toincrease partnerships withdomestic and foreign companies.


[Alipour] said NISOC had signed 18 memoranda ofunderstanding (MoUs) with8 domestic and foreign oil heavyweights forthe development ofParsi, Karanj, Ragsefid and Shadegan oilfields.


Tehranproposeda bartering system July 4 toits partners toexchange oil forgoods purchases. Iranian Parliamentary Energy Committee representative Asadollah Qarekhani stated, "We will use a bartering system toexchange oil forgoods. This means that we will make the purchase ofgoods conditional onoil sales. We are telling relevant markets and countries, which will purchase our oil, that we will buy goods incase they purchase our oil."
China has also begun circumventing US sanctions byissuingYuan-denominated oil futures, aswell asceasing trade ofUS oil importsonTuesday. Sinopes trading division Unipec decided Tuesday not tobuy or sell any shares ofUS crude untilOctober.



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