Oil, here’s how Iran makes a mess of US sanctions
Despite US sanctions in place, oil production in Iran and exports from that country experienced peaks in August not seen since 2018, the year in which Donald Trump tore up the nuclear deal with Tehran.
How do you explain the mystery of a country like Iran whose oil production and exports are experiencing new peaks despite the US sanctions in force? The answer is that America is no longer interested in enforcing its own sanctions because it welcomes the return of Iranian crude oil on the market to control prices and compensate for the new production cut decided by OPEC+.
Boom in production and exports.
Despite US sanctions in place, oil production in Iran and exports from that country experienced peaks in August not seen since 2018, the year in which Donald Trump tore up the nuclear deal with Tehran.
Based on data from TankerTrackers.com, an organization that monitors and measures oil cargo deliveries, Bloomberg reports that in the first twenty days of August, Iran exported 2.2 million barrels per day of crude oil and condensates, a volume of much higher than that recorded in the previous months of 2023.
Production is also on the rise, the Oil Price portal points out. Earlier this month, Iranian Petroleum Minister Javad Owji said the country was pumping nearly 3.2 million barrels a day, expecting an increase by the end of the month. up to 3.3 million. Also this month, the head of the state oil company announced plans to further increase production by the end of September to 3.5 million barrels per day.
According to another Bloomberg estimate, production could reach 3.6 million barrels a day by the end of the year, not far from the 3.8 million that Iran was producing before Trump trashed the nuclear deal.
Destination China.
Since the old buyers of Iranian crude oil, such as Europeans, South Korea and Japan, do not dare to buy it so as not to irritate the US, and since India, at least for now, is turning to Russia, China is hoarding it.
Also taking advantage of a discount on the price which, according to Bloomberg, reaches ten dollars a barrel, Beijing is practically buying almost 100% of the crude oil that Tehran puts on the market.
Kpler data shows that exports to China peaked at 1.5 million b/d in August, the highest level in a decade, but according to TankerTrackers.com barrels reaching China would even exceed two million.
Effect on costs.
The boom in exports from Iran has had the effect of increasing global oil flows as major producers such as Saudi Arabia, united in the OPEC+ cartel, have decided to reduce production by 1 million barrels per day.
This has had an impact on prices, with a barrel trading below $85 in London this week, much to the relief of consumers and central banks, who now see a possible end to the inflationary spiral.
With the price of a gallon of gasoline in the US dropped to 4 dollars, it is also Joe Biden who rejoices as he sees a real chance of being re-elected in 2024.
Towards the end of sanctions?
The mystery of a country under sanctions that increases production and exports is easily explained: the US is turning a blind eye.
Some members of the Biden administration confirmed to Bloomberg that Washington deliberately stopped enforcing the sanctions that the US had reintroduced in 2018.
The US game can be explained not only by the beneficial effects of the return of Iranian crude oil to the market, but also by the secret diplomacy underway between the two countries which are negotiating a new overall agreement along the lines of the one signed in 2015 under the auspices of the so-called P5+1 group.
The agreement with which the US obtained the release of five American prisoners in exchange for the release of 6 billion dollars deposited in South Korea and deriving from the proceeds of old shipments of crude oil dates back to a few days ago. Despite much criticism at home, the agreement confirmed the existence of confidential talks underway between the two countries.
Expert opinion.
As Helima Croft, an analyst at RBC Capital Markets, pointed out to Bloomberg, “it's the traditional game of energy diplomacy: making deals to get more barrels. The economic interests of the US and Iran are aligned when it comes to putting more barrels on the market".
It is an analysis with which another analyst such as Fernando Ferreira, director of the Geopolitical Risk section of Rapidan Energy Group agrees, for which "the White House would be happy to see more barrels in the market to help keep prices under control".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/petrolio-iran-sanzioni-usa/ on Sun, 03 Sep 2023 05:36:37 +0000.