"US administration willing to accept potentially higher oil prices"

Oil&Gas Materials 24 April 2019 10:09 (UTC +04:00)

Baku, Azerbaijan, April 24

By Leman Zeynalova – Trend:

The US administration is willing to accept potentially higher oil prices as a result of deciding not to extend the sanctions waiver for Iranian oil imports, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.

The expert believes that this decision may tighten the market and cause prices to rise, but this depends on how the rest of OPEC and non-OPEC reacts, for those with spare capacity.

“The US is banking on those countries currently voluntarily restricting production (for example Saudi and Russia), increasing production to fill Iran sanctions gap – but will they? It appears the US administration is determined to enforce this to incentivize a policy change in Iran, and willing to accept potentially higher oil (and US gasoline prices),” Welch noted.

As for Iran, the expert said that in order to mitigate the effect of the US sanctions, the country needs to maximize sales to those not affected or concerned by those sanctions.

The US State Department said that the country won’t issue additional reduction exceptions to existing importers of Iranian oil.

“United States will not issue any additional Significant Reduction Exceptions to existing importers of Iranian oil. The Trump Administration has taken Iran’s oil exports to historic lows, and we are dramatically accelerating our pressure campaign in a calibrated way that meets our national security objectives while maintaining well supplied global oil markets. We stand by our allies and partners as they transition away from Iranian crude to other alternatives. We have had extensive and productive discussions with Saudi Arabia, the United Arab Emirates, and other major producers to ease this transition and ensure sufficient supply. This, in addition to increasing U.S. production, underscores our confidence that energy markets will remain well supplied,” reads the message.


Follow the author on Twitter: @Lyaman_Zeyn