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The Trump administration refrained from triggering a military strike last month, but the US and Iranian escalation cycle continues.
Iran has announced its latest plan to reduce its commitment to the 2015 nuclear deal, increasing enrichment levels by more than 4.5 percent and promising to take additional measures all over the world. the 60 days until Europe holds its promise to offer the benefits of the nuclear deal. Europe is not able to offer a safe pbadage for Iranian oil and the meager trade it can secure through its nascent financial entity is not enough for Tehran.
China blamed Washington. "The US side has not only unilaterally withdrawn from the agreement, but it has also created more and more obstacles for Iran and the other parties to apply the". agreement through unilateral sanctions and a long-armed jurisdiction, "said a spokesman for the Chinese Foreign Minister. "It has been proven that unilateral bullying has become an aggravated" tumor "and creates more problems and larger crises globally."
No longer content to wait for the Trump administration, especially with the fall in oil exports, Iran has decided to take more forceful measures. Since the United States withdrew from the nuclear deal last year, Iran declared that it was no longer obliged to enforce its commitments .
Iran's new strategy involves a series of gradual but progressive measures to put pressure on Europe to achieve its results. "The breach of the agreement by Iran could now lead Europe to impose sanctions on Iran," Commerzbank wrote in a note. However, France said it would not take any punitive action against Iran for the moment. Related: The Biggest Winners in the Oil and Gas Sector in the Second Quarter of 2019
But the seizure of an Iranian oil tanker by the UK last week in Gibraltar opens another area of contention. The UK said the tanker was carrying oil to Syria, which went against the EU's sanctions (the incident was not related to US sanctions) . But since Iran is not a member of the European Union, Tehran said it should not be subject to sanctions from the EU for transporting oil to Syria. As such, Iran claims that the seizure of the tanker is illegal. "We will not tolerate this act of maritime piracy on the part of the United Kingdom," said Iran's Defense Minister Amir Hatami, according to Mehr News.
The stalemate could spoil EU-Iran relations. Bloomberg has announced that an oil tanker managed by BP was blocking the Saudi coast in the Persian Gulf, fearing that Iran would seize it as a form of retaliation. BP's tanker was sailing for the Iraqi Basra terminal last week but was quickly diverted to Saudi waters.
"It's a psychological game that's played out," Olivier Jakob, general manager of energy consultant Petromatrix GmbH, told Bloomberg. "No one wants to be the one whose ship is seized" for sure. "We do not know what will happen next, but it should be a worrying sign for the oil market if Iraqi oil exports are suddenly put in place. It is likely that only British tankers would be at risk until the stalemate is resolved.The last ride, however, is another problem for shippers crossing the Strait of Hormuz. Related: Persian Gulf conflict could send oil beyond $ 325
Iran's oil output would have fallen to 2.28 million barrels a day, its lowest level in three decades. But exports are only a small fraction of this amount. "According to Bloomberg data, sanctions imposed by the United States had resulted in Iran's oil exports to just under 300,000 barrels a day in June," Commerzbank wrote in a note.
While the calculations in Tehran and Washington are mostly short-term, Iran has a long-term problem of sanctions and isolation. Its oil fields are older and require more investment to maintain production and may experience greater wear and tear without maintenance. "With the reduction of its oil exports this year, Iran should be worried not only about the loss of market share today (and the time it will take for it to restore its position in the global economy), but also the possibility of a drop in production that could lead to a loss of productivity – capacity more permanently if the oil fields are damaged by a reduction in forced production or reduced maintenance costs over time, "Amy M. Jaffe, an energy and environment researcher at Council on Foreign Relations, wrote last week.
Nevertheless, oil prices rose only slightly on Monday. Even though tensions continue to rise, traders are not too worried. "The fact that the market responds so little to the tense situation in the Middle East is a reflection of a very well-supplied market in general and a very relaxed market," said Bjarne Schieldrop, chief badyst. raw materials at SEB. "The concern for global growth is at the heart of the whole market spirit these days."
By Nick Cunningham from Oilprice.com
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