Iran's Reshadat oil field

Oil traders who expect Iran waivers are in for a shock: Hedgeye

Bloomberg – The oil market could be in for a surprise when U.S. sanctions on Iranian crude exports are implemented in 10 days, according to Hedgeye Risk Management LLC.

Traders who expect the U.S. to hand out waivers allowing certain nations to continue buying oil from the Islamic Republic, “are making a huge miscalculation,” Joe McMonigle, head of energy policy at Hedgeye, said in a note.

“We see more than a 50 percent chance of an early enforcement of Iran sanctions to send a message and incentivize others to get Iran imports to zero,” McMonigle said. “We think this will come as a shock to oil markets.”

Oil prices this month have tumbled from their highest levels in almost four years, in part on speculation that waivers could blunt the impact of sanctions. Hedgeye sees that reversing, with the loss of at least 1 million barrels-a-day of Iranian exports boosting Brent crude by $5 a barrel. The international benchmark could even hit $90 a barrel for the first time since 2014, before settling back to around $85, McMonigle said.