• 25 mins DOE Seeks To Boost Usage Of Carbon Capture Tech
  • 1 hour Taxpayers Likely To Pick Up The Growing Tab For DAPL Protests
  • 4 hours WTI At 7-Month High On Supply Optimism, Kurdistan Referendum
  • 10 hours Permian Still Holds 60-70 Billion Barrels Of Recoverable Oil
  • 15 hours Petrobras Creditors Agree To $6.22 Billion Debt Swap
  • 19 hours Cracks Emerge In OPEC-Russia Oil Output Cut Pact
  • 23 hours Iran Calls On OPEC To Sway Libya, Nigeria To Join Cut
  • 1 day Chevron To Invest $4B In Permian Production
  • 1 day U.S.-Backed Forces Retake Syrian Conoco Gas Plant From ISIS
  • 1 day Iraq Says Shell May Not Quit Majnoon Oilfield
  • 4 days Nigerian Oil Output Below 1.8 Million BPD Quota
  • 4 days Colorado Landfills Contain Radioactive Substances From Oil Sector
  • 4 days Phillips 66 Partners To Buy Phillips 66 Assets In $2.4B Deal
  • 4 days Japan Court Slams Tepco With Fukushima Damages Bill
  • 4 days Oil Spills From Pipeline After Syria Army Retakes Oil Field From ISIS
  • 4 days Total Joins Chevron In Gulf Of Mexico Development
  • 4 days Goldman Chief Urges Riyadh To Get Vision 2030 Going
  • 4 days OPEC Talks End Without Recommendation On Output Cut Extension
  • 4 days Jamaican Refinery Expansion Stalls Due To Venezuela’s Financial Woes
  • 5 days India In Talks to Acquire 20 Percent Of UAE Oilfield
  • 5 days The Real Cause Of Peak Gasoline Demand
  • 5 days Hundreds Of Vertical Oil Wells Damaged By Horizontal Fracking
  • 5 days Oil Exempt In Fresh Sanctions On North Korea
  • 5 days Sudan, South Sudan Sign Deal To Boost Oil Output
  • 5 days Peruvian Villagers Shut Down 50 Oil Wells In Protest
  • 5 days Bay Area Sues Big Oil For Billions
  • 5 days Lukoil Looks To Sell Italian Refinery As Crimea Sanctions Intensify
  • 6 days Kurdistan’s Biggest Source Of Oil Funds
  • 6 days Oil Prices On Track For Largest Q3 Gain Since 2004
  • 6 days Reliance Plans To Boost Capacity Of World’s Biggest Oil Refinery
  • 6 days Saudi Aramco May Unveil Financials In Early 2018
  • 6 days Has The EIA Been Overestimating Oil Production?
  • 6 days Taiwan Cuts Off Fossil Fuels To North Korea
  • 6 days Clash In Oil-Rich South Sudan Region Kills At Least 25
  • 6 days Lebanon Passes Oil Taxation Law Ahead Of First Licensing Auction
  • 7 days India’s Oil Majors To Lift Borrowing To Cover Dividends, Capex
  • 7 days Gulf Keystone Plans Further Oil Output Increase In Kurdistan
  • 7 days Venezuela’s Crisis Deepens As Hurricane Approaches
  • 7 days Tension Rises In Oil-Rich Kurdistan
  • 7 days Petrobras To Issue $2B New Bonds, Exchange Shorter-Term Debt
Alt Text

Cheap Oil Or A Weak Dollar: Pick One

When the price of oil…

Alt Text

Reserves vs Valuations: Exxon’s Permian Predicament

ExxonMobil is having a difficult…

Alt Text

Have Oil Markets Reached A Turning Point?

Oil prices hit their highest…

No One Can Afford Another Round of Iran Sanctions

As Iran and the P5+1 prepare to meet in Baghdad on 23 May for the next round of nuclear talks, Europe should be seriously considering the implications of its planned sanctions on Iranian oil scheduled to be implemented on 1 July. Obama certainly is considering this.

Greece is collapsing and the entire Euro zone is in trouble. A newly elected French President Francois Hollande is a very important confidante for US President Barack Obama, and together they have plans to save Europe – particularly Greece and the Eurozone – with or without Germany’s cooperation.

These ambitious plans, which must see some results before US elections in November, will be thwarted if Europe goes through with its 1 July sanctions on Iranian oil. Though Washington cannot at this point start publicly expressing the desire that Europe back down on the sanctions plans, the Obama administration knows the result of those European sanctions with be higher oil prices and could spell his doom, along with the Eurozone’s.

Saber-rattling aside, everyone (except Israel) wants to cut a deal in Baghdad. The heavy-handed sanctions that are already in place are having an effect, and there is no need to add a new round of European sanctions in July. Hopefully, Baghdad will make this clear.

Iran is hurting under sanctions. Sources on the ground in Iran tell Oilprice.com that while the situation is not as dire as it is being portrayed in the Western media, things are bad and getting worse. Inflation is soaring, with food prices increasing anywhere from 25 to 125 percent on different items. Fuel prices are also soaring, while unemployment is at about 35 percent.

The Iranian government is subsidizing food and fuel and handing out cash subsidies to as much as 60 percent of the population. Meanwhile, lawmakers are battling in parliament over whether to cut subsidies that the budget cannot handle much longer. So far, those opposed to cutting subsidies have won out, clearly holding out hope that the Baghdad talks will lead to a relaxation of sanctions.

If Europe goes forward with its 1 July sanctions, the situation will worsen exponentially. But the window of opportunity is now, in Baghdad, while there is still room for diplomacy.

Among the deals the West could put on the table, despite Israel’s objections, are a stay for the 1 July European sanctions, and a reversal of European sanctions on insurance for tankers transporting Iranian petrochemicals, which is supposed to be extended to oil in July.  The Obama administration will not remove sanctions as a result of Baghdad, but it could promise an incremental relaxation in return for a commitment from Iran.

Ahead of Baghdad, the G-8 summit on 20 May adopted the Camp David Declaration, which indicates that this is the way things are progressing. The declaration text was conciliatory, calling on “Iran to seize the opportunity that began in Istanbul, and sustain this opening in Baghdad by engaging in detailed discussions about near-term, concrete steps that can, through a step-by-step approach based on reciprocity, lead towards a comprehensive negotiated solution which restores international confidence that Iran's nuclear program is exclusively peaceful.”

A number of statements by Iranian officials, too, herald some positive development – or at least signal that (almost) all sides are prepared to stave off an immediate crisis.  Particularly, Iran is preparing its public for negotiations that could be perceived as compromise, stressing that any of these compromises would be victorious for Iran.

The bottom line is that Obama cannot afford another round of sanctions on Iran, at least not in the run-up to elections. Europe, of course, cannot afford anything. If Israel can be kept from blowing its top, the Obama administration will do everything in its power to ensure that the “Iran situation” does not reach any dangerous climax over the next six months.

By Jen Alic of Oilprice.com

Jen Alic is a geopolitical analyst, co-founder of ISA Intel in Sarajevo and Tel Aviv, and the former editor-in-chief of ISN Security Watch in Zurich.




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News