U.S. President Trump has made a deal with some OPEC producers to keep prices high as they support the U.S. economy and boost federal taxes. This is what Iran’s Energy Minister Bijan Zanganeh said on state TV this week as quoted by Bloomberg, adding that Trump was engaging in “shenanigans” on the oil market.
It’s not too hard to guess which the OPEC producers Zanganeh mentioned are…
Saudi Arabia has been a strong opponent of the Iran nuclear deal and was now quick to offer to fill any gap that new U.S. sanctions would leave on international oil markets by curbing Iran’s abilities to export its crude.
Saudi Arabia is also the most vocal supporter of ever-higher prices, as it prepares to list its state energy giant Aramco and struggles with a much too high breakeven price for its crude.
Iran, on the other hand, has repeatedly called for more “reasonable” prices, which for the Tehran officials are prices between US$60 and $65 a barrel. Like many analysts, Iran is concerned that pricey crude oil will start affecting demand, and not in a good way.
Now, some forecast oil could reach US$100 a barrel by next year, with one hedge fund manager, notorious Pierre Andurand, going as high as US$300 a barrel. Apparently, according to the bull camp, oil can reach US$300 without hurting demand enough to start sliding back down.
This stance is questionable, to say the least. Already some experts, such as Reuters’ John Kemp, are warning that the imposition of new U.S. sanctions on Iran would spur other OPEC members into increasing their production levels, which would effectively put an end to the OPEC production cut deal. Should this happen, prices will not get even close to US$100, they will start sliding back to US$60.
Another group of people tracking events in the oil world believes that sanctions will not have a serious negative effect on Iranian oil shipments to its biggest clients. China has stated its commitment to Iranian imports, and as an added benefit for both, is ready to settle these imports in yuans, undermining the dominance of the greenback. Other importers, including staunch U.S. allies Japan and South Korea, are also looking for ways to keep on buying Iranian crude.
Related Posts:We truly are under attack. We need user support now more than ever! For as little as $10, you can support the IWB directly – and it only takes a minute. Thank you. 1,020 views