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The Oil Markets Are At A Confusing Crossroads

The Oil Markets Are At A Confusing Crossroads

The latest IEA report suggests…

Iran Urges Trump: Don’t Tap SPR To Lower Oil Prices, Drop Sanctions Instead

Oil storage

Iran is urging U.S. President Donald Trump not to tap the U.S. Strategic Petroleum Reserve (SPR) to bring oil prices down, but drop the sanctions against Tehran instead.

A senior Iranian oil official, the country’s OPEC Governor Hossein Kazempour Ardebili, addressed President Trump over the weekend following reports that the U.S. Administration is actively considering tapping the SPR to try to bring down oil prices—and gasoline prices—ahead of the mid-term elections in November, the same month in which the renewed U.S. sanctions on Iran are returning.

The U.S. Administration is considering releasing part of the 660-million-barrel SPR, with options ranging from a test sale of 5 million barrels to a release of as much as 30 million barrels, and even higher if coordinated with other countries, Bloomberg reported on Friday, quoting two people familiar with the plans.

Iran’s OPEC representative Kazempour responded to this with an email, as carried by Bloomberg on Sunday:

“My advice to you, Mr. President, is to avoid touching the SPR - to cool down and give up sanctioning Iranian oil.”

“Mr. President, as I have foreseen earlier, it seems you are resorting to the SPR due to the fact that there is no spare capacity to cover for Iranian exports - but there will be many repercussions,” Kazempour said.

“Saudi Arabia, the U.A.E and Russia pretended to be able to deliver 2.5 million barrels a day of Iranian exports,” Iran’s oil official wrote. “That was a miscalculation, Mr. President: you have fallen in their trap, and prices will go up,” Kazempour noted.

Related: Is The Oil Industry Repeating A Critical Error

This is not the first time that the Iranian official has directly addressed President Trump regarding oil and oil policies. Earlier this month, Kazempour said that the President’s tweets about oil had already pushed up prices by at least $10 a barrel in recent weeks.

Since the U.S. signaled a harder line against Iran’s oil exports last month, analysts have started to warn that many more Iranian barrels would be removed from the market than initially expected, and the thinning global spare capacity as Saudi Arabia and Russia raise production would boost oil prices.

Last week, a Senior State Department Official said that U.S. State Department officials had visited Saudi Arabia to coordinate stronger pressure on Iran and discuss ways to ensure that the oil market is well-supplied after U.S. sanctions on Iran’s oil kick in.

By Tsvetana Paraskova for Oilprice.com

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  • John Brown on July 16 2018 said:
    You have to laugh at Iran. They are a criminal regime supporting Terror and trying to take over Syria and dominate the Middle East. Using the SPR make perfect sense. While we should keep it full most of the time the fact that the USA is meeting more and more of its energy needs means it can be used the SPR tactically as well as strategically. Using it to lower oil prices and hurt the economy is somewhere in between Strategic and Tactical, and using it to make sure Iran can be dealt with is a strategic use of the SPR.

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