The latest round of sanctions against Syrian President Bashar Assad and his government prohibit US entities, wherever located, from engaging in any transactions or dealings with Syrian petroleum products.
Syria’s oil production declined from 581,000 bpd in 2001 to 375,000 bpd in 2009, according to BP data, but recovered to 385,000 bpd in 2010 after new fields started up.
The country also imports refined oil products normally via regular tenders and exports products occasionally.
Following are the views from analysts about implications for the oil market and their views on whether the EU to would follow the US or not.
“At the moment the oil market is really dominated by what is going to happen with the economy. Syria is a relatively small producer and these sanctions won’t stop the flow of oil out of Syria, just the flow into the US So given the volume and the nature of the sanctions it should be relatively easy for the oil market to adjust.”
“Compared to Libya, it’s a completely different situation. It’s possible (that European governments will follow what the US has done) — the leaders tend to discuss it before they take action — but given the volume of oil it should be possible to have that reallocated to another country. Iran has been on the sanction list for years and it has never really been a big problem for Iran to sell its oil.”
“The impact would come from potential implications for those with US interests dealing in Syria and whether it essentially becomes extra-territorial in nature like some other US sanctions have, that is the risk event. Those involved will be looking in more detail to see if their existing contracts trade and finance routes are viable.
“It does send a powerful message albeit with not much muscle behind it unless there is that extra-territorial aspect to it, ie, applying beyond US companies as they already have limited amount of investment and trades in Syria at the moment because of previous sanctions.
“With the restrictions on US persons, wherever located, from engaging in oil and gas transactions with Syria. The US might hope it starts to deter European and other companies from doing business with Syria, they’ve tried to do this with previous rounds of sanctions but it’s usually been quite slow burning in actual effect.
“(From a market perspective...) This will have some psychological impact on the oil market but exports for the first half of the year were in the region of 150,000 barrels per day so it’s not a great amount, but there is a psychological impact of potentially emerging hot spot in an oil-rich region would be the most serious concern.” “Overall, I do not think this will have a huge impact. There are sanctions on Iran and Iran is still exporting oil. Sanctions never seem to work, so I don’t think it will have a big effect — its trade flows are not huge.
“Europe has no trade ban on Iran, so will it put one on Syria? As long as it is only the US, it will not have a great impact.”
“The EU will probably follow, but they produced less than 400,000 bpd and consume most of the crude themselves. The only impact is potentially on pipelines running through the country.
“The case with Libya was another story altogether. With Syria the impact is mainly increasing instability in the region. In terms of oil supply it won’t have any significant impact.”
“Oil for now is discarding developments in the Middle East, and continues to track equity markets amidst very weak US economic data today.”
