Iranian oil minister calls Trump's order to OPEC insulting

Ivan Schwartz
July 11, 2018

The United States, China and India had urged oil producers to release more supply to prevent an oil deficit that could undermine global economic growth.

"There will remain no such organization (as OPEC) in the future after continuation of the sanctions" against Iran, he was quoted as saying. But will his attempt to restore the status quo before the Iran deal really work? If the U.S. administration were to order a complete cutoff of Iranian barrels before the end of the year, oil could surge to more than $120 a barrel, analysts argued.

President Trump is finding that his threats and heated rhetoric do not always have the effect he wishes. This, the Iranian minister warned, would only disrupt the market by increasing concerns among producing countries that would see their sovereignty threatened as a result of the U.S. pressure.

"Putting an actual nominal level of geopolitical risk, supply crunch concerns as well as Opec plus compliance shirking into the current level of oil prices is challenging, but we view that at least an upside risk of Brent and WTI exceeding north of $85 and $80, respectively, in Q3 2018, depending on the magnitude of these disruptions and how they impact the overall supply-demand balance", Ehsan Khomas, head of Research and Strategist for Mena at MUFG, said.

Iran, an OPEC member, faces renewed USA sanctions over Trump's decision to quit the global nuclear deal with Tehran, which has added to supply concerns on world markets.

He has repeatedly urged the Organization of the Petroleum Exporting Countries (OPEC) - which includes key USA ally Saudi Arabia - to raise its production.

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OPEC and Russian Federation and other producers last month agreed to add 1 million barrels to the market.

Iraq has not recovered its oil production capacity since its "liberation" by the U.S. in 2003 and the al-Qaeda and ISIS insurgencies that followed it.

"When we look at Saudi production and exports going back to 1970, we can observe that the highest annual oil production recorded was 10.4mn b/d in 2016, and Saudi has never produced more than 10.6mn b/d of oil on average over a single month", he wrote. Would that crash the U.S. economy?

President Trump's demand last week that OPEC "reduce prices now" or U.S. military protection of OPEC countries may not continue nearly sounded desperate. "We will use a bartering system to exchange oil for goods".

On Tuesday, the USA ambassador to Germany also called on Berlin to block an Iranian bid to withdraw large sums of cash from bank accounts in Germany. One Chinese refiner has just announced that it would cancel orders of United States crude and instead turn to Iran for supplies. Unlike many other news organizations, we have not put up a paywall.

Ironically, President Trump's "get tough" approach to Iran may end up benefiting Washington's named adversaries Russian Federation and China - perhaps even Iran.

Other reports by GizPress

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