WEEKLY ENERGY RECAP: Assessing the impact of sanctions waivers for buyers of Iran's oil

An oil tanker is pictured off the Iranian port city of Bandar Abbas. (AFP)
Updated 04 May 2019

WEEKLY ENERGY RECAP: Assessing the impact of sanctions waivers for buyers of Iran's oil

  • Asian refiners, the largest buyers of Iranian crude, have already begun asking other producers for higher volumes for June and July

Volatility heightened last week, which closed with prices at their lowest in almost a month, after hitting a six-month high a week ago.

Prices slumped after a buildup in US crude inventories by 10 million barrels, amid record high US oil production to 12.3 million bpd.

That took the edge off earlier bullish market sentiment after expectations that the upcoming Iranian oil supply shortage would be filled by other OPEC producers.

Brent crude fell to $70.86 per barrel, while WTI fell to $61.94.

Asian refiners, the largest buyers of Iranian crude, have already begun asking other producers for higher volumes for June and July loadings.

This comes in light of the expected fall in Iranian crude as the waivers of previous US sanctions expire, as reported by S&P Global Platts.

Asian refiners are seeking car- goes for June and July to substi- tute Iranian barrels — though it is unclear if Chinese refiners are among them or if the world’s larg- est oil importer will continue with commercial swap arrangements as in 2012 — not a preferred option for Tehran.

The US 2019 gasoline price aver- age is within the range of $2.70 to $2.80 per gallon, which is just 50 cents higher than at the start of the Trump presidency.

The oil market suggests there is an incompatibility between US energy policy goals for lower prices and OPEC goals for a steady supply and demand balance.

The unexpected introduction of US sanctions waivers pushed the market into a surplus last year which led to the softening of the oil price.

That was only resolved by the 1.2 million bpd production cuts agreed by the so called OPEC+ group that took effect in January, which helped tighten the market and bring it back into balance.

Still, producers remain cautious. The market does not expect OPEC to react to the expiry of waivers by increasing supplies in the same way it did last year.

OPEC producers have until June 25, when they meet next, to read the situation and assess the likely impact of ending US sanctions waivers on Iranian crude exports.

*Faisal Mrza is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter: @faisalmrza


Lebanon economy losing $70-$80 mln/day due to crisis -economy minister to MTV

Updated 28 min 4 sec ago

Lebanon economy losing $70-$80 mln/day due to crisis -economy minister to MTV

  • Bteish said the situation is "worsening" and requires a quick solution
  • Lebanon has been swept by protests since Oct. 17

BEIRUT: Lebanon's economy is losing at least $70 million-$80 million a day - about half its usual income - due to the crisis that has paralysed the country, caretaker economy minister Mansour Bteish told broadcaster MTV on Wednesday.
Bteish said the situation is "worsening" and requires a quick solution. Lebanon has been swept by protests since Oct. 17 and is now facing the worst economic strains since its 1975-1990 civil war.