Is there water in the gas?

Sanctions against Iran: Is there water in gas?

Would Trump's sanctions against Iran be effective? In fact, many western – and even European – companies are about to leave the country, and major refiners are already cutting back their imports of Iranian oil. The barrel prices are also lower than at the time of the sanctions put in place against Iran by Obama where it was close to 100 dollars, it seems that these Trump sanctions benefit from a favorable context. The fall of Iranian oil exports by one million barrels a day in 2012, in a general context of higher prices than today, would therefore plead for greater efficiency in the American sanctions that have just been decreed.
Not so fast in reality, because the very nature of the oil market is noticeably different than in the days of Obama who had the good fortune to benefit from the fabulous development of shale oil largely offsetting the closure of the Iranian tap. , at the precise moment when these sanctions were the most devastating to this country, in 2012. It's simple: the US national production could thus grow by 3 million barrels a day between 2012 and 2014, making it possible to offset very largely the reduction of Iranian exports of the order of 1 million barrels per day.
The global situation is fundamentally different at the moment because – pending the favorable spillover in the coming 12 to 24 months of the Permian Basin between Texas and New Mexico, which would contain 35 billion barrels – US production is not able to offset the decline of Iranian exports. In addition, global supplies are disrupted by significant declines in output from Libya and Angola, and especially by the collapse of Venezuelan oil production in an environment of substantial subsidence of OPEC stocks. .
At least, Obama had the finesse to measure his sanctions against Iran and adopt a measured approach so as not to provoke an additional surge in oil prices. The uncompromising attitude towards its allies and trading partners of the Trump administration, meanwhile, predict a barrel likely to reach $ 120. Obama had in fact made good use of the favorable environment that the oil markets were then going through, while Trump, in the medium term, seems doomed to put a lot of water in his wine, forced that it will be much more flexible in these sanctions if he wishes to save himself the discontent of his electorate, very sensitive to the prices at the pump.

Article Sanctions against Iran: Is there water in the gas? first appeared on

article written by Michel Santi, economist (http://www.michelsanti.fr)

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(Gestionsuisse.com / 11.07.2018 15:39)
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