Finance

Global oil market steady despite uncertainty in Tehran

Black steel container beside brown grass | Jeff Finley on Unsplash

The global oil market is remaining steady, in part due to the loss of supply from Iran thanks to U.S. sanctions. According to a report from Reuters, energy traders are enthusiastic about the upcoming sanctions, which are set to target the Iranian oil industry in November of this year.

Iranian oil production appears to be slowing down. According to Reuters, the Gulf country’s production level has fallen from 3.09 million barrels per day (bpd) in April to 2.06 million bpd. And although the Iranians are offering their crude at lower prices than competitors, investors are reluctant to do business with Iran due to looming threats from the U.S.

This fact is not lost on Ayatollah Ali Khamenei, Iran’s Supreme Leader who has been trying desperately to find allies without success. According to Reuters, the Ayatollah stated on Wednesday that he doubted Europe’s ability to salvage the 2015 nuclear deal, and indicated that Iran might walk away from the agreement entirely.

You've reached your daily free article limit.

Subscribe and support our veteran writing staff to continue reading.

Get Full Ad-Free Access For Just $0.50/Week

Enjoy unlimited digital access to our Military Culture, Defense, and Foreign Policy coverage content and support a veteran owned business. Already a subscriber?

The global oil market is remaining steady, in part due to the loss of supply from Iran thanks to U.S. sanctions. According to a report from Reuters, energy traders are enthusiastic about the upcoming sanctions, which are set to target the Iranian oil industry in November of this year.

Iranian oil production appears to be slowing down. According to Reuters, the Gulf country’s production level has fallen from 3.09 million barrels per day (bpd) in April to 2.06 million bpd. And although the Iranians are offering their crude at lower prices than competitors, investors are reluctant to do business with Iran due to looming threats from the U.S.

This fact is not lost on Ayatollah Ali Khamenei, Iran’s Supreme Leader who has been trying desperately to find allies without success. According to Reuters, the Ayatollah stated on Wednesday that he doubted Europe’s ability to salvage the 2015 nuclear deal, and indicated that Iran might walk away from the agreement entirely.

“There is no problem with negotiations and keeping contact with the Europeans, but you should give up hope on them over economic issues or the nuclear deal,” Khamenei said on Wednesday, according to Reuters. “The nuclear deal is a means, not the goal, and if we come to this conclusion that it does not serve our national interests, we can abandon it.”

After U.S. President Donald Trump withdrew from the accord in May of this year, many European countries still hoping to salvage the 2015 agreement considered bolstering the Iranian economy and oil business via their banks. However, U.S. pressure to isolate Iran has left the Ayatollah with almost no foreign support.

With Europe out, Tehran could be forced to return to the bargaining table with Washington if it hopes to avoid an economic disaster. However, Khamenei stated there was no way he or anyone else from the government would come to the table with the “indecent and confrontational” Americans.

Adding to the confusion in Tehran, the Iranians recently removed several chief ministers for failing to navigate the country through the U.S. sanctions successfully. The education minister, the minister of economy and finance, and the labor minister have all been removed from their seats over the last week. The minister of industry, mines, and business is currently under fire from the Iranian parliament and may soon be removed as well.

While the future for Iranian oil appears bleak, the overall world supply remains more or less unchanged, and may even rise by the end of the year. Countries outside of the Organization of the Petroleum Exporting Countries (OPEC) have seen an increase in production, leveling off world supply and keeping the oil prices stable.

“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” Bank of America Merrill Lynch said in a note to clients, according to Reuters. “Currently, non-OPEC supply outages are at a 15-month high of 730,000 barrels per day. However, nearly half of these volumes are in the process of being restored.”

According to Bank of America, the Iranian sanctions will really start to impact global markets during the beginning of 2019.

About Joseph LaFave View All Posts

Joseph LaFave writes about finance, maritime issues, healthcare, the National Guard, and conflicts around the world. Before becoming a journalist, he worked as an EMT in Florida and as an ESH engineer for Lockheed Martin supporting several DoD and NASA satellites. He holds a Bachelor of Science degree from Florida State University and a Master of Science in Management from Southern New Hampshire University.

COMMENTS

You must become a subscriber or login to view or post comments on this article.

More from SOFREP

REAL EXPERTS.
REAL NEWS.

Join SOFREP for insider access and analysis.

TRY 14 DAYS FREE

Already a subscriber? Log In