OPEC+ may build up oil production due to U.S. sanctions against Iran

Saudis to Seek Nuclear Weapon If Iran Resumes Its Nuclear Program: FM

Saudis to Seek Nuclear Weapon If Iran Resumes Its Nuclear Program: FM

The Trump administration has given buyers 180 days to wind down imports after pulling out of a landmark nuclear deal with world powers.

Obviously, there are too many embedded contingencies here to make any semblance of an "educated" guess (for one thing, it's possible that under pressure from European allies, Trump could moderate his stance and there are also a number of reasons to believe Iranian supply might just be routed elsewhere if Europe doesn't take it), but it's at least conceivable that if the USA takes an aggressive approach to the secondary sanctions related to Iranian crude and Venezuela continues down the path to a complete economic collapse, that prices could surge.

However, the latest decision by Trump could be viewed as an example of how the United States does not hesitate to easily break agreements reached through serious negotiations with other countries. The imperial worldview which motivates Trump's administration declared Iran, North Korea, China and Russian Federation to be the greatest sources of competition for the United States, and in need of robust attention, in the National Security Strategy (December 2017) and the National Defense Strategy (January 2018).

Iran ramped up its oil production by one million barrels per day after sanctions were lifted in early 2016.

But Bolton didn't rule out sanctions for European companies doing business with Iran.

"Do we want to be a vassal that obeys and jumps to attention?" This time, America's allies in Europe want to keep the nuclear accord alive and are resisting joining any USA embargo.

"We have had various conversations with various parties about different parties that would be willing to increase oil supply to offset [the impact of sanctions]" U.S. Treasury Secretary Steven Mnuchin told reporters on May 8".

Analysts have outlined other ways Europe can push back. A Chinese oil company also has a deal to develop the country's massive South Pars offshore natural gas field.

Among the options they outlined: recalling European ambassadors from Washington, and even expelling US ambassadors, depending on Trump's response and retaliating against the United States commercially.


An outstanding issue in the talks is whether the Saudis will agree to forego uranium enrichment and spent fuel reprocessing, two dual-use technologies that can be used to produce fuel useable in nuclear reactors but can also be used to produce the highly enriched uranium or separated plutonium needed for nuclear weapons.

But minutes after he spoke, Iranian President Hassan Rouhani said Tehran could resume uranium enrichment "without limit" if its interests are not assured by the remaining signatories.

But standing up to Washington may not be so simple.

Oxford Economics said on Tuesday that about half of the "fiscal boost" from tax cuts and government spending could be reversed in 2018 should USA oil prices average $70 a barrel.

The European and USA positions were too far apart on the so-called sunset clauses allowing for some restriction on Iran's nuclear enrichment program to be lifted. "There is no one who will realistically choose Iran over the USA", said energy consultancy FGE. In an interview in Tehran, Iran's minister for global and commercial affairs, Amir Hossein Zamaninia spoke out against pricing. This will add additional pressure on OPEC.

European Union trade with Iran has skyrocketed from just over $9 billion in 2015 to roughly $25 billion in 2017, with Germany, France and Italy the top commercial partners. Through his decision, Trump called on his Cabinet to re-impose "all" USA sanctions that were lifted or waived under the agreement.

Bank of America Merrill Lynch this week discussed the "risk of $100/bbl oil next year", saying global oil markets likely will tighten further if a new Iran deal is not reached or OPEC and Russian Federation extend production cuts into 2019.

Recent history is likely to weigh into its decision. Both tried to change Trump's mind on Iran during visits to the White House in April, and both failed.

"It's about Iran", said Dorsey, "not about finding a solution".

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