November sanctions on Iran to be proof of strength or weakness of US as oil producer
Baku, Azerbaijan, Nov.1
By Leman Zeynalova – Trend:
The November sanctions of the US on Iran will effect affect the market, as it will be proof of the strength or weakness of the US (as largest oil producer and consumer), Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY and SVP MEA-Risk, told Trend.
“If no reaction, global oil market shows it is very well supplied, which I doubt, looking at the current fundamentals worldwide and possible hickups. Don’t forget, in addition to Iran, Venezuela and others are totally imploding, while Iraq, Libya, Nigeria and Algeria are not keeping up also,” said the expert.
Widdershoven believes that effectiveness of the sanctions will depend on:
US legal sanctions on 3rd parties
Possibility of US to control and block SWIFT system for Iran
Coordination with Arab OPEC producers
Willingness of Asian countries not to get into a real conflict with the US
EU has no influence at all, Brussels and governments can talk and put in place whatever they want, internationally operating companies in Europe will not burn their fingers on Iran.
Further the expert noted that in order the maintain the oil market balance, other oil producers first need to coordinate overall production and export volumes to counter the loss of Iranian volumes in the market.
“At the same time, OPEC and Russia need to organize a production agreement, without Iran, to cope with new situation. Fluctuations will be in the market, but most of them will be in December 2018 or start 2019, when oversupply from Iran over the last weeks will have been taken out of the market,” he added.
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