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Oil prices inched higher on Monday after Israeli Prime Minister Benjamin Netanyahu claimed that Israel had proof that Iran lied about its nuclear weapons program.
The Brent Crude benchmark fell to $72.91 early on Monday, but rallied to as high as $75.34 in later-day trading after Netanyahu cited thousands of documents that Israel had obtained which showed Iran had lied repeatedly and “brazenly.”
In a succinct phrase that’s more indicative of U.S. President Donald Trump, Netanyahu said in a televised address “I’m here to tell you one thing: Iran lied. Big time.”
Specifically, Israel is claiming that Iran lied when it said it did not have a “comprehensive program to design, build, and test nuclear weapons.” Netanyahu went on to say in the address that Tehran’s Project Amad was designed to produce five warheads, each with a 10 kiloton TNT yield—warheads that could be placed onto a missile.
Netanyahu called on President Trump to “do the right thing”—a comment that is particularly poignant given the May 12 deadline for issuing yet another sanctions waiver to Iran.
The approaching May 12 deadline and the very real possibility that President Trump will not grant Iran another waiver has kept oil prices supported in recent weeks, and today’s accusations regarding Tehran’s nuclear inclinations sent prices even higher as analysts estimate that Iranian sanctions could add between $2 and $10 per barrel to oil prices this year, according to a Bloomberg poll.
Netanyahu’s prodding of President Trump may prove to be unnecessary, as President Trump warned in January when he waived the sanctions that it was the last such waiver.
Should the Iranian nuclear deal fall apart, it could remove anywhere from 200,000 bpd to 1 million bpd from the market.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
Your grand kids will ask one day what a dollar looks like and how they were once used? What tales you can tell as yes indeed you were here to witness the end of the dollar Rome style and the currency reset of the century. The cause effect nature of said reset is very well documented but still it's always better for the next generation to hear the tales first hand with no historic distortions. Let the USA forever rest in the grave with all blame duly earned and for that, one must always tell the truth about their wicked ways WITH BOMBS AND DESTRUCTION that devoured like the maw of the beast, all that would not self-chain to this failed dollar currency. IMHO
Mr Netanyahu and his country have been egging the United States not only to walk away from the nuclear deal with Iran but also to go to war with Iran over its nuclear programme.
If Israel is against Iran’s acquiring nuclear weapons, why doesn’t encourage Iran to abandon its nuclear programme by relinquishing its own sizeable nuclear arsenal.
Iran would doubtless not be averse to possessing nuclear weapons. There is an element of security and also logic involved with Iran’s quest for nuclear weapons. Their logic is that if Israel, India, Pakistan and North Korea can defy the world and get away with it, why not Iran.
Whether President Trump stays in the Iran deal or walks away from it is irrelevant to the global oil market or prices. The global oil market has had enough time to factor in the probability of US withdrawal from the deal. A re-introduction of sanctions on Iran will neither impact on the global oil market nor on oil prices.
And contrary to what many analysts are predicting, Iran’s oil exports will not lose a single barrel of oil as a result of the forthcoming sanctions. Moreover, Iran will be pricing its oil exports and being paid for its exports by the petro-yuan thus bypassing the petrodollar and also nullifying US sanctions. Furthermore, most of Iran’s oil exports go to China and other Asia-Pacific region. Any reduction in imports of Iranian oil by countries cooperating with US sanctions will be more than offset by increases exports to China. China and Russia and probably the European Union (EU) and many countries in the world will refuse to cooperate with US sanctions.
The pre-Iran nuclear deal’s sanctions worked against Iran’s oil exports because of a combination of the EU’s sanctions on global insurance companies insuring Iranian oil cargoes and US sanctions on banking making it difficult for Iran to receive payments for its oil imports in petrodollar.
The EU is not going to walk away from the Iran nuclear deal and therefore it will not be imposing any sanctions on Iran thus further weakening US sanctions and Iran will be using the petro-yuan and the euro for its oil sales thus bypassing the petrodollar altogether.
And while Iran has the option to retaliate against President Trump by restarting some restricted nuclear activities, the Iranian leadership will not fall for that trap do so as to expose the United States as the defaulter and also not to give the United States the excuse to start a war with Iran egged by the Israel.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London