Much of Iran’s fate depends on US-China trade talks
Baku, Azerbaijan, Oct. 2
By Mirsaid Ibrahimzade - Trend:
Much of Iran’s fate in the oil market depends on the US-China trade talks, Dr. Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS) told Trend.
“Iran still exports something like 200,000 barrels per day through various channels. But much of its fate depends on the US-China trade talks,” the expert noted.
Stressing that the market is still unexpectedly stable, he said that this market resilience is not likely to hold if the relations between the Saudis and the Iranians continue to escalate and the market would respond sharply to such scenario.
Commenting on other factors that have a noticeable impact on the oil market, besides the outages at Saudi oil processing facilities, Luft emphasized the currency, which will increasingly influence the market.
He explained that the trade war and the global economic slowdown have sparked a race to the bottom in interest rates and this is leading to currency devaluation among many key currencies which in turn is putting upward pressure on the US dollar.
The expert added that a stronger dollar could offset the rise in oil prices due to the geopolitical factors, however Trump will intensify his pressure on the Federal Reserve to lower interest rates and devalue the dollar in order for US exports to remain competitive and this could cause upward movement in oil prices.
“Another factor is the future of the US oil industry. Higher oil prices provide relief to the distressed US producers but it is yet to be seen how quickly the US will be able to upgrade its export facilities and secure itself globally a bigger market share for its oil,” Luft said.
It should be noted that the current tension in the oil market and the Persian Gulf was caused by a drone attack that targeted Saudi Aramco's Abqaiq and Khurais oil installations, forcing the national oil company to shut them down on September 14. This resulted in a more than twofold drop in Saudi Arabia's daily net oil output.
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