Iran downplays impact of USA sanction threats

Iran downplays impact of USA sanction threats

Iran downplays impact of USA sanction threats

Trump tweeted Wednesday pointing fingers at "the OPEC Monopoly" for "driving prices higher".

Speaking to the Wall Street Journal, Michael Cohen, Head of Energy Commodities Research at Barclays, said the market was now "caught between two forces".

Top exporter Saudi Arabia told Opecit raised oil output by nearly 500,000 barrels per day last month, Opecsources said, a sign Riyadh wants to make up for shortages elsewhere and dampen prices.

Oil this month rallied to the highest level in more than three years as the Organisation of Petroleum Exporting Countries' output increase plan was overshadowed by supply disruptions in Libya, Canada and Venezuela.

The White House said Saturday that Saudi Arabia's King Salman bin Abdulaziz Al Saud agreed to raise output after the Trump administration ordered all countries to stop buying oil from the Islamic Republic by November or face U.S. sanctions, as part of Trump's withdrawal from the Iran nuclear deal.

Outside of OPEC, Russia has been eager to churn out more oil, though it could be bound to its partnership in the group's pledge to stabilize the market.

If you've noticed that the prices at your local gas stations have been going up and down like a yoyo lately, you can blame it on the fickle price of oil.

Because many OPEC countries are facing domestic troubles, the general expectation is that Iran, which is the fifth largest crude oil exporter, has a larger and increasingly discernible impact on how fuel prices behave in coming months.

Energy consultancy FGE on Friday issued a stark warning of looming supply shortages due to USA sanctions against Iran, and because of disruptions elsewhere.

Kazempour Ardebili said Trump was trying to intensify tensions between Iran and Saudi Arabia and he called on the United States to join world powers in a meeting with Iran in Vienna on Friday.

US crude oil is trading on the futures market today for about $73.52 a barrel, down about $1 from the previous session. Brent crude futures were up 11c at $78.35 a barrel.

"You impose sanctions on major producers, founders of OPEC, and yet you are asking them to reduce prices?!"

"You are hammering on good guys in OPEC", he said. And that realization has helped drive up prices over the past two weeks as countries and traders worry about the security of future supplies.

Despite these measures, Goldman Sachs said in a July 4 note to clients that "the market will remain in deficit" in the second half of the year.

Even if the US government grants some waivers to allies, FGE estimated 1.7 to 2 million bpd of crude and condensate would be cut out of markets once its sanctions are implemented. Iran insists that production limits OPEC set in late 2016 still apply, and that any countries who increase beyond these levels are undermining the unity of the organization.

"OPEC has not defined oil prices for the past 30 years, it is a financial market", said Ardebili. While the comments were ambiguous, Iranian officials in the past have threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile United States action.

Refineries purchase oil on the futures market for production, and what they pay influences what gasoline distributors pay and what retail gas stations charge consumers.

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