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The Trump administration has intervened in recent weeks in two disputes in the Middle East that have hindered regional oil production, with the aim of boosting global supplies as Iran's oil sanctions come into effect, officials said.
Washington is trying to negotiate an agreement between Saudi Arabia and Kuwait on a controversial strip of oil-rich land called "neutral zone" between the two countries, said officials. US authorities are also trying to persuade the Iraqi federal government to allow oil exports by the semi-autonomous Kurdistan region of Iraq, people familiar with the effort said.
This long wait has prevented about 800,000 barrels a day from escaping international oil markets. US officials hope that, by correcting the differences between the two parties, they will be able to reopen taps on blocked crude oil, according to these people.
Washington faces difficulties. Disputes over the Saudi-Kuwaiti neutral zone and the Baghdad-Kurdistan impasse have both withstood years of negotiations and, at times, diplomatic pressure.
But if these efforts succeed, they could help protect the oil markets – and the US economy – from the repercussions of sanctions imposed by Iran. Washington plans to impose a series of severe economic restrictions on Iran on Nov. 5, including some that target Iranian oil sales. US officials say they want to stop all 2.2 million barrels of exports of the country.
This represents more than 2% of world oil production. The global supply is large enough that the prospect of its extinction helped sustain world crude prices for a good part of the year. Iranian exports have already fallen by around 800,000 barrels a day before sanctions, while buyers are pulling out.
For much of the year, President Trump accused the Organization of Petroleum Exporting Countries, a cartel of large producers actually headed by Saudi Arabia, to keep oil prices at a minimum. artificially high level, and called on Saudi Arabia and other major producers to open their faucets. .
OPEC, for its part, says it is acting responsibly to keep oil prices at levels that promote global growth. He recently agreed with Russia to pump more oil.
International crude has skyrocketed this summer and fall, reaching multi-year highs above $ 80 a barrel, while expectations of increased demand and concerns over market constraints are expected. supply in countries such as Venezuela and Libya. The threat of losing as much of Iran's output as some observers of the oil market expected to reach $ 100 by the end of the year. Brent settled last Thursday at $ 73 a barrel, although many investors still rely on a boost from the withdrawal of Iranian exports.
With big producers like Saudi Arabia, Russia and the United States, which are almost pumped, production disruptions elsewhere could threaten world supply and boost prices.
In this context, Trump administration officials contacted their counterparts in Saudi Arabia and Kuwait to urge them to resolve their dispute over the neutral zone.
The two companies shut down about 500,000 barrels a day three years ago, citing disputes over land and environmental permits. To revive the diplomatic efforts begun several weeks ago, US Secretary of State Mike Pompeo called senior Saudi and Kuwaiti officials at the end of October to restart the mediation process, according to one person. close to the folder.
Saudi Foreign Minister Adel Jubair said at the end of last month that he hoped that disputes over the Kuwait area would be shared.
Chevron
Corp.
, which operates one of the deposits, said early last month that it was ready to resume pumping oil if the two countries reached an agreement.
Kuwaiti and Saudi officials say privately, however, that disputes are still far from being resolved.
A summit held in September between Saudi Crown Prince Mohammed and Kuwaiti ruler Sheikh Sabah Al Ahmad Al Sabah has ended acrimoniously, according to people close to the case. The Saudi side has asked for more control over the fields, according to an official familiar with the discussions.
Even if an agreement were reached, technical limitations mean that a return to maximum capacity could take nine months, said one official. An obstacle: the resumption of production in the neutral zone could lower the pressure in a giant field of 1.2 million barrels per day in Saudi Arabia, Saudi officials said.
The impact of the United States on Saudi Arabia has always been difficult to assess. This is particularly the case after Riyadh declared that its members were responsible for the death of Saudi dissident journalist Jamal Khashoggi. The United States condemned the killing and Trump threatened to punish him, appearing to paralyze US-Saudi relations. At the same time, the natural areas dispute could offer the Saudis an opportunity to help restore these links.
At the same time, officials from the US state and energy departments held talks with the Iraqi central government and the Kurdish semi-autonomous regional government to take over exports from the disputed region of Kirkuk, according to Iraqi and Kurdish officials. Brian Hook, Special Representative of the US State Department for Iran, spoke about the Iraqi talks during their talks in mid-October. It was to reassure European officials last month, according to officials present.
International sales of about 300,000 barrels of Kirkuk crude a day were blocked last year after Baghdad took military control of the region – chasing Kurdish forces that had actually annexed it. to their autonomous region during the war against the Islamic State. Baghdad has since refused to pay transit fees for a Kurdish regional government export pipeline to Turkey.
State Department and Energy spokespersons did not immediately respond to requests for comment.
In exchange for the resumption of exports to Turkey – which itself must replace Iranian oil – the United States has declared in Baghdad that it could obtain exemptions from the sanctions applicable to other trade with Turkey. Iran, according to a person close to the negotiations. US officials hope this will yield 200,000 barrels a day of oil exports, with some of Kirkuk's oil being used locally.
With banks tired of dealing with Tehran, Iraq is already struggling to pay for the Iranian natural gas it needs for its power plants.
-Isabel Coles in Beirut contributed to this article.
Write to Benoit Faucon to [email protected], Timothy Puko to [email protected] and Summer Said to [email protected]
