"The impact is more for the crude oil price, because Iran now is exporting about 2.6 million barrels (per day), and if we go back to the first sanctions, they were exporting 1.5 million," ENIs CEO Claudio Descalzi was quoted by media as saying.
When sanctions were imposed by the Barack Obama administration on Tehran in 2012, Iran's oil exports dropped to approximately 1.5 million barrels per day (bpd). Since the export restrictions were lifted in 2015, as part of the multilateral deal that offered economic relief in exchange for curbs to Iran's nuclear program formally known as the Joint Comprehensive Plan of Action (JCPOA) that figure increased by more than 1 million.
"So there is a lack of 1 million in the market and that is going to impact the oil price, and also the balance of different crudes," Descalzi told the CNBC. "Because 1 million is going to Europe, the rest to the Far East."
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The vast majority of Iran's oil exports, more than 1.5 million bpd, goes to China, India, Japan and South Korea. Already Japan and South Korea have signaled they will try to seek waivers from the US to continue buying Iranian crude.
"We have a demand that is increasing 1.6 to 1.7 million bpd yearly average, so that is going to create a disruption in terms of cost and price," he added. "And when we have this kind of situation, the landscape becomes very uncertain."
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Descalzi further said that price uncertainty ahead means uncertainty for investors, particularly those looking at long-term, multi-billion dollar projects like those required for the extractives sector.
"For energy you have to make big investments," he added. "And when there is a lot of uncertainty, the investment is not easy to be performed. But there are so many other geopolitical issues, that the landscape is very difficult to understand where we're going."
