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Iran Oil ‘Unsanctionable’

In the run-up to November 4, when US President Donald Trump will restore sanctions on Iran"s petroleum sector, speculation is rising about the materialization of this decision. Despite repeated threats by US officials to reduce Iran"s oil exports to zero, many experts believe that Iran"s oil could not be slapped with an embargo.


Iran"s former National Representative to OPEC Fereidoun Barkeshli, who is now president of Vienna Energy Research Group, tells "Iran Petroleum" that the National Iranian Oil Company (NIOC) has hired the most competent marketers who have proven themselves even during the 1980-1988 imposed war.

Here is the full text of the interview Mr. Barkeshli gave to "Iran Petroleum":

How do you assess the oil market under the current circumstances?

Prior to the 174th ministerial meeting of OPEC and the fourth meeting between OPEC and non-OPEC from July 22 to July 23, 2018 in Vienna, owing to reasonable decisions made by OPEC oil ministers to keep collective output unchanged and remove 1.8 mb/d from the market to deplete major consumers" stocks in 2016, global oil prices were steady enough and the prices were growing in harmony with growing oil demand and world economic growth. The global oil market had adapted itself to the alliance between OPEC and non-OPEC, which comprised 24 small and big oil producers. But new developments having emerged immediately after the 174th meeting perturbed the global market to some extent, causing a $1.65 decline in the North Sea Brent price.

Do you think that the oil market can eliminate Iran"s oil now?

Before answering this question, I "d like to point out that the date of November 4, when President Trump plans to enforce a ban on Iran"s oil exports, subject to approval by the House of Representatives and the Senate, overlaps with the date set for midterm elections in the US. Due to a variety of challenges which Trump is faced with, he is likely to lose some of his supporters even from the Republican Party and at best he is likely to realize only part of his threats to exert pressure on Iran. Trump"s defeat to [Russian President Vladimir] Putin in Finland"s Helsinki has already dented his chance of success in winning seats in the Senate and the House. That would undoubtedly blunt his desired pressure on the Islamic Republic of Iran.

Now as far as Iran"s oil sanctions are concerned, it may be said in a single phrase that "Iran"s oil is unsanctionable". Although the US may block transfer of Iran"s oil money, as it has already done, due to its control over SWIFT, it would be possible to find a solution to this problem. Fruitful negotiations are under way with the Europeans in this regard, which give cause to optimism. It should be also noted that NIOC"s marketing system has the best oil marketers in the world, who have proven their competence under the toughest conditions ever since the 1980-1988 imposed war.

In the most optimistic scenario, how much oil can producers supply on the market?

Figures about genuine oil production capacity in OPEC and non-OPEC countries are among the most confidential data in the oil producing nations. We don"t know the real production capacity of Saudi Arabia or Russia. For more than twenty years now, Saudi Arabia has been claiming to have capacity to produce 12 mb/d of oil, never seen so far. Even during the Saddam regime"s invasion of Kuwait, which took 6 mb/d off market immediately, Saudi Arabia did not prove such capacity. Such cases in oil affairs call into question Saudi Arabia"s ability to produce more than 10.5 mb/d. Therefore, an alternative to Iran"s oil, i.e. Saudi Arabia, has been sidelined. Russia is facing similar conditions and it may be able to supply oil on the market by dipping into stocks of oil bought from Turkmenistan or Kazakhstan. Of course, Saudi Arabia has also stocked oil in its offshore and onshore storage facilities, which it can tap to supply oil on the market. What I want to say is that producers of conventional crude oil have more or less reached their maximum production capacity and are unable to provide any extra supply. Therefore, in my view, the 24 members of oil alliance may be able to add 1mb/d to their output. Of course it must be noted that Venezuela and Libya have seen their oil output fall by more than 1 mb/d, while Nigeria, Angola and Gabon have hit snags in production.

How much will oil demand reach in the third and fourth seasons of the current year?

The year 2018 has been and continues to be fraught with events for the oil market. The US"s recent move to levy heavy tariffs on imports from China and the European Union and the latter"s retaliatory measures have disturbed trade ties between industrialized nations. Therefore, it is impossible to calculate any reliable figure for the world economic growth and growth in demand for oil. Therefore, at best, demand for crude oil will increase by 1.8 to 1.9 mb/d.

To what extent can OPEC contribute to market stability now?

Through constructive and strong interaction with market players, OPEC has been instrumental in global oil market stability even under toughest conditions. OPEC owes its success to Iran and Saudi Arabia, which helped keep the market from collapse under very difficult conditions. The global oil market is indebted to OPEC services.

Is US sincere in claiming that it would tap its strategic petroleum stocks after imposing oil sanctions on Iran?

Dipping into strategic stocks was the idea of Henry Kissinger. It was put into practice in 1974 in reaction to Arab nations" oil boycott. The stocks may be tapped only when oil flow stops due to the outbreak of war. The US currently owns 667 million barrels of oil in its strategic stocks with Trump saying at least 35 million barrels may be consumed. That indicates the US government"s fear and anxiety after restoring sanctions on Iran. The US did not dip into its strategic stocks even during George Bush"s invasion of Iraq.



Courtesy of Iran Petroleum


13:14 - 4/09/2018    /    Number : 12565    /    Show Count : 243

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