Sanctions on Iranian oil exports are hitting much harder than most people predicted as the administration of US President Donald Trump takes a tough line on enforcement, said executives from the world’s largest energy traders.
Perhaps 2mn bpd of Iranian crude could eventually be lost to the global market, said Jeremy Weir, chief executive officer of Trafigura Group Pte. While other traders including Vitol Group of Cos and Gunvor Group saw the impact closer to 1mn, that’s still twice as much as most people initially predicted.
“Iranian exports of crude oil will be much reduced,” Vitol chairman Ian Taylor said in a Bloomberg television interview. That’s largely the cause of the severe “fear factor” in the crude market that’s driven prices up to $85 a barrel, he said.
The traders speaking at the Oil and Money conference in London on Wednesday, which included Gunvor CEO Torbjorn Tornqvist and Glencore Plc’s head of oil and gas Alex Beard, weren’t universal in their predictions for prices. Crude futures at $100 or higher were possible by year-end, said Tornqvist, while Taylor saw the market drifting $5 or $10 lower by January.
“We don’t have a supply squeeze, there’s plenty of oil around” right now despite the sanctions, said Taylor. With current prices, demand could start to weaken, he said.
Efforts by the European Union to preserve the international nuclear deal with Iran by setting up a payment mechanism to circumvent US sanctions won’t help oil buyers, the trading-house executives said.
“I don’t see any chance that the European payments mechanism on Iran could work,” said Beard. When asked if there was anything that would tempt oil traders to skirt US sanctions, such as the oil market tightening significantly or Tehran offering discounts, Taylor was emphatic: “No, no, and no.”
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
S&P revises outlook on Qatar to ‘stable’
Commercial Bank continues to invest in technology to keep edge: Group CEO
Commercial Bank MD sees optimism for Qatar
Post-blockade Qatar economy in focus at Euromoney Conference
Turkey wins favour as a top trade for 2019
Bond bargain or pariah? Oil clouds Bahrain’s outlook
South African gold industry enters final phase of slow death
South Africa’s key economic and political risk events in 2019
Huawei CFO charged with conspiracy to defraud banks