Strategies behind the Iran sanctions — Arab News' weekly energy recap

Crude oil prices continued their downward momentum with Brent crude falling to nearly a three-month-low at $72.83 per barrel. (AFP)
Updated 03 November 2018

Strategies behind the Iran sanctions — Arab News' weekly energy recap

RIYADH: Crude oil prices continued their downward momentum with Brent crude falling to nearly a three-month-low at $72.83 per barrel.
WTI also fell to $63.14 per barrel. The commitment of Saudi Arabia and Russia to offset any shortages after the imposition of sanctions on Iran have eased oil prices. Noticeably, Saudi Arabia increased its production to 10.7 million barrels per day (bpd) in October and is capable of increasing output further if needed. Russia produced at a post-Soviet-era peak of 11.36 million bpd in September. This news has comforted the market with the knowledge that any supply shortages from Iran will be effectively met.
Tomorrow, the US economic sanctions on Iran will come into force. These sanctions were supposed to take Iranian oil exports to zero amid the “highest level of economic sanctions” imposed. However, the US granted waivers to Iran’s top buyers, so that Iran will still be able to legally export at least one million bpd.
Even prior to the sanctions, Iran’s crude oil exports went down from 2.2 million bpd to 1.5 million bpd, as most of Iran’s customers have found other suppliers. Despite the US waivers, many nations will continue to look for other options to purchase the crude oil they need, as the US waivers could be withdrawn with little warning.
It is not clear yet if Iranian condensate will be included in this latest round of sanctions. It was not included during the 2012 sanctions because the Obama administration did not consider condensates to be crude oil. Much of Iranian condensate is from natural gas processing plants. There has been no Trump administration policy statement on whether Iranian condensates will be treated the same way as crude oil.
Any crude oil Iran can sell will be some relief for the country as it is running out of storage. Early last month, Iran was forced to move two million barrels of crude into a bonded storage tank at the port of Dalian in northeast China. It used a similar tactic during previous US sanctions. Such a ploy is necessary so that Iran can maintain enough storage for condensate from its natural gas fields. Otherwise, they would be forced to shutter natural gas production. That would cause severe unrest among its population since natural gas is used for about 70 percent of Iranian domestic energy consumption, including home heating.
China is the largest importer of Iranian crude. China used to be the largest importer of US shale oil until the outbreak of the US-China trade dispute. Now is the time for China to play its cards, inviting the US to de-escalate the trade dispute if China agrees to buy US crude in place of Iranian barrels. Considering that China’s trade surplus with the US has hit record highs, this could be a win-win situation. The only question is whether the US oil export infrastructure can keep up with the volumes needed. US oil exports have faced some challenges lately, dropping to 1.5 million bpd from a peak of two million bpd.
Another issue, which is also uncertain in regards to the US sanctions, is the small amount of trade of Iranian crude oil which is done through small banks outside the US financial system. Those banks helped Iran to export oil during 2012 sanctions. This is despite the fact that Iranian oil tankers will face huge challenges in securing insurance that is mandated by the refineries’ discharging ports.
Finally, it is unknown if the sanctions will include Iran’s “swap” arrangements with neighboring countries. Iran does oil-gas swaps with Caspian Sea nations. It also does oil swap deals with these countries, so that Tehran can supply northern areas with oil processed at the Tehran, Tabriz, and Arak refineries without having to transport it all the way from wells in the south. In another swap deal, Iraq sends oil from its northern Kirkuk fields to Iran by road, to be refined in Iran.
In return, Iran sends the same amount of crude to Iraq’s southern ports for exports. These swaps are considered an outlet for Iranian crude oil and US sanctions on them could cause considerable disruption.


Jubilant cheers as Dubai begins one-year countdown to Expo 2020

Updated 20 October 2019

Jubilant cheers as Dubai begins one-year countdown to Expo 2020

  • Dubai prepares for eye-catching countdown on Burj Khalifa
  • Live performances from singer Mariah Carey and acclaimed Emirati singer and Expo 2020 ambassador Hussain Al-Jassmi

DUBAI: Crowds gathered at different locations in the UAE on Sunday night to mark its one-year countdown to Expo 2020 in October next year, with host emirates Dubai staging a spectacular concert, topped by a light projection on the iconic Burj Khalifa.

American superstar Mariah Carey was the star of the night, which also saw performances from regional artists including Khalifa, Shamma Hamdan, Abri and Funk Radius, Showcase and Jaysus Zain. The audience also grooved to a few Arabic tunes from Emirati singer Hussain Al-Jassmi.

A make-shift stage was set up at the Burj Park in Dubai’s downtown area to host the performances, while people also enjoyed a good view of the tallest building in the world. The countdown was facilitated by Emirati social media sensation Khalid Al-Ameri and Bollywood actress Shraddah Kapoor. 

A 3-minute firework display lit up the skies of Dubai as the crowd eagerly waited for Carey to appear on stage.

The 49-year-old singer sang her all-time favorite songs, including “Emotion,” “We Belong Together,” and a revival of the Motown classic “I’ll Be There,” to an enthusiastic audience who didn’t mind the heat and humidity at the outdoor venue.

The other six emirates also marked the occasion with free-for-all activities in venues such as the Louvre Abu Dhabi, Al Majaz Waterfront in Sharjah, Ajman Museum, Umm Al Quwain Corniche, Al Qawasim Corniche in Ras Al Khaimah and Fujairah Fort.

The events, Minister of State for International Cooperation and Expo 2020 Director-General Reem Al-Hashimy said, will “offer a window into the once-in-a-lifetime celebration that awaits from October 20, 2020.”

“The next 12 months will see us put the finishing touches to ensure an exceptional World Expo,” she added, in a report by state-run WAM.

The Louvre Abu Dhabi featured YouTube sensation Sandra Sahi, as well as singers Stephon Lemar, Layla Kardan, the Emirati Trio.

Indian band ROOH, singer and pianist Clarita de Quiroz, Egyptian oud player Rami Zaki and other regional artists were celebrating the count down at Sharjah’s Al Marjaz waterfront.

While the Ajman Museum hosted Arabic fusion band, pop-rock musician Hydyy, Emirati soul singer Chakram, poet Storm Fernandes, artist Humaira Hussain and MC Mohammed Enaba.

The 6-month Expo 2020, to be held at a vast new site in the south of Dubai, will officially open on Oct. 20 next year, with organizers expecting an estimate of 25 million visitors.