Oil import won't have instant impact

Oil import won't have instant impact

China's experience in circumventing sanctions could come in handy as Europe, that like China has rejected Trump's move and vowed to ignore the sanctions, weighs ways of putting its money where its mouth is by attempting to shield European companies from potential USA punitive action. In fact, they will likely have consequences that go against the stated objectives of the Trump administration.

The sanctions will restrict Iran's energy exports and isolate its struggling banks. While investors are still assessing the full impact of the USA withdrawal from the nuclear accord, UBS Group AG said the sanctions could cut Iran's oil exports by as much as 500,000 barrels a day in the next six months.

Saudi Arabian Crown Prince Mohammed bin Salman told CBS News in March, "Saudi Arabia does not want to acquire any nuclear bomb, but without a doubt, if Iran developed a nuclear bomb, we will follow suit as soon as possible". "Iranian is not the only crude".

Losses, however, were limited as the market contended with concerns about Venezuela's crude production slipping further and with bullish drawdowns in US crude inventories. And if South Korea does not find some sort of common ground with the United States, it risks exacerbating a point of friction between two partners that can not afford to be out of lockstep in the messages - both explicit and implicit - being sent in a critical period to Pyongyang. India and Iran have robust economic and commercial ties covering many sectors though it has traditionally been dominated by the import of Iranian crude oil by India.

Iran has said Washington will regret it "like never before" if Trump walks away from the deal. Mnuchin said: "These sanctions do impact all of the major industries". The other nuclear states are Russian Federation, the U.S, France, China, the U.K., Pakistan, India and North Korea.

However, if oil prices continue to increase in the wake of decreased capacity of Iran to sell its oil, Caribbean economies will be adversely affected, particularly as the Oil Producing Exporting Countries (OPEC), especially Saudi Arabia, have chose to cut back their production to force their revenues upwards. Prices gained $2.08 to close at $71.14 on Wednesday, the highest settlement since November 2014. Accordingly, by 5 November 2018, all US sanctions will be in full effect again.

The threat of new sanctions comes amid an oil market that has already been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and No.1 producer Russian Federation have led efforts since 2017 to withhold oil supplies to prop up prices. USA heating oil futures surged to $2.2258 a gallon, the highest since February 2015.

More news: Cardiff City lining up move for Glasgow Rangers star
More news: Faheem, Shadab revive Pakistan
More news: Bale scores twice as Real Madrid hammers Celta Vigo

European oil companies are not ruling out reducing Iranian oil imports after the threat of new US sanctions, with some expecting banking issues to hinder trade, but there was no rush to immediately cut volumes. Most of its oil exports go to China and other Asian countries, along with significant customers throughout Europe. But Europe is unlikely to do so. Wednesday's oil surge brought prices to its highest prices in more than three years, according to CBS News.

The two leaders agreed for their teams to hold discussions on the potential impact of United States sanctions on firms doing business in Iran.

Saudi Arabia and Iran have long contended over influence in the region. Riyadh lost no time in assuring the market on Tuesday that it would compensate for any fall in Iranian supply.

Oil prices had been supported by expectations that Trump would pull out of the deal, which could hit Iranian crude exports and feed geopolitical tensions in the Middle East, home to one-third of the world's daily oil supply. Washington can not ensure success alone, particularly because it can not offer sufficient heavy oil exports to compensate for the loss of Iranian heavy oil barrels from the market.

Saudi Arabia desperately needs foreign investment to implement Prince Mohammed'sVision 2030, a far-reaching plan for social and economic reform that aims to diversify the kingdom's conservative society and oil-dependent economy and turn it into a 21st century, knowledge-based state. I am glad to see that we finally have a president who agrees and believes the safety and security of the United States should always come first.

Unlike 2012, the United States is entering these sanctions alone, and this means that it has less control over their efficacy. Increasing supply by too much, or without coordination with fellow producers such as Russian Federation, could inundate markets and drive prices lower.

Related Articles