The US may allow more sanctioned Iranian oil onto global markets even without a revival of the 2015 nuclear accord, according to the biggest independent crude trader.
While a new agreement would limit Iran�s atomic activities and ease US sanctions on its energy exports, talks between Tehran and world powers have stalled since March. Oil traders are increasingly pessimistic that negotiators will strike a deal.


Still, US President Joe Biden could decide that the need to bring down record-high pump prices ahead of November�s midterm elections outweighs the benefit of strictly enforcing sanctions, including by seizing more Iranian oil tankers.


�Uncle Sam might just allow a little bit more of that oil to flow,� Mike Muller, head of Asia at�Vitol Group, said Sunday on a�podcast�produced by Dubai-based Gulf Intelligence. �If the midterms are dominated by the need to get gas prices lower in America, turning a somewhat greater blind eye to the sanctioned barrels flowing out is probably something you might expect to see. US intervention in these flows has always been pretty sparse.�


Chances of Reviving Iran Nuclear Pact Shrinking, EU Says


The US�confiscated oil�from an Iranian-flagged vessel off Greece last month, which was followed days later by Tehran detaining two Greek tankers in the Persian Gulf. But Washington�s move is unlikely to signal the start of more tanker seizures by the US, according to Muller.


Iran has�raised�oil exports this year, most of them ending up in China. A new nuclear deal would lead to an additional 500,000 to 1 million barrels per day coming on to international markets, enough to weigh on prices, according to energy analysts. The Islamic Republic also has around�100 million barrels of oil in storage�that could be sold down quickly.




Crude prices have soared more than 50% this year to almost $120 a barrel, mostly because of the fallout of Russia�s invasion of Ukraine. While many Republicans and some Democrats oppose any lifting of Iranian sanctions, Biden is under�plenty of pressure�to lower gasoline prices, which have shot up to an average of more than $4.80 per gallon in the US.



Never Been Wider

There�s little consensus about the direction of oil prices, according to Vitol, which traded 7.6 million barrels of crude and refined products a day in 2021. While supplies are tight, Washington�s release of�strategic reserves�is helping balance the market.


Saudis Nod to US With Oil-Output Hike, But Keep Russia Close


Thursday�s decision by OPEC+ -- a 23-nation group of producers led by Saudi Arabia and Russia -- to accelerate output increases is unlikely to have much impact, Muller said. That�s because many members will struggle to pump more and Moscow�s exports could drop due to sanctions over the war in Ukraine.


�The range of expert opinion out there has never been wider,� said Muller, who�s based in Singapore. �There are people who think the market�s going to $135-$140 a barrel. And there are people who think we�re going below $100 again.�



Two Worlds
There�s also a dichotomy emerging between richer and poorer countries, he said. Some in Asia such as Malaysia and Singapore are experiencing a demand rebound as coronavirus lockdowns ease. Others including Pakistan and Sri Lanka, which has�defaulted�on international bonds and is struggling to pay for fuel imports, are experiencing demand destruction.


�It�s a tale of two worlds,� Muller said. �The affluent world is going to have their holidays and burn jet fuel. But the impact elsewhere is a lot more profound. The divide between the prosperous and the countries that have a lower ability to pay for commodities is becoming extremely stark.�

 

 

By Beloomberg