• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 1 min The lies and follies of the "cry wolf" enviros: No more fire in the kitchen: Cities are banning natural gas in homes to save the planet
  • 4 hours China Burns More Coal than the Rest of the World !
  • 37 mins Iran Finds New Oil Field With Over 50 Billion Barrels: Rouhani
  • 4 hours "Climate Migrants"
  • 6 hours New York State Taxpayers Lose 900 Million to Tesla
  • 3 hours Does Brazil Auction Flop Forbode the Outcome of the Saudi Aramco IPO ?
  • 14 mins CHK Trading @ 90 Cents
  • 2 hours China's Renewables Boom Hits the Wall
  • 22 hours Water, Trump, and Israel’s National Security
  • 11 hours Giant Windmills Wildly Unpopular
  • 24 hours The End For Deutsche Bank and the European Union?
Ross McCracken

Ross McCracken

Ross is an energy analyst, writer and consultant who was previously the Managing Editor of Platts Energy Economist

More Info

Trump’s Gunboat Diplomacy

Trump

Washington’s announcement that it will not extend its sanctions waivers for key importers of Iranian oil - China, India, Turkey, Japan and South Korea - raises the geopolitical stakes in the oil market and beyond.

While last week’s column argued - wrongly - that the waivers would most likely be extended, the view that oil price risks were weighted to the upside now looks something of an understatement.

Washington’s decision to engage in what is, in effect, gun boat diplomacy will have both short and long-term consequences.

Oil balance

The immediate impact was a $2/barrel jump in crude prices. Whether this is sustained or extended now depends critically on two factors: the degree to which importers of Iranian crude comply with the threat of sanctions; and the speed with which Saudi Arabia and other producers can ramp up production to address any shortfall.

Iran is currently estimated to be exporting just shy of 1 million b/d of crude, primarily to China, India and Turkey. Given the sharp cuts in Saudi output since the end of last year and spare capacity existing prior to that, the Kingdom should be able to provide the volumes required to replace lost Iranian barrels.

Moreover, Washington’s decision, with Saudi support, represents a green light for all producers to end restraint and produce whatever they can. Some have no capacity to do so, while for others – Venezuela and Libya – there is a real possibility…




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