Iran, Venezuela May Cause Oil Mar­ket Tur­moil

Iran News - - FRONT PAGE -

LON­DON (Dis­patches) - The In­ter­na­tional En­ergy Agency (IEA) has warned that global oil sup­plies could be se­verely im­pacted by the U.S. de­ci­sion to pull out of the Iran nu­clear deal. Cri­sis-hit Venezuela con­sti­tuted another big risk, it added.

Pre­sent­ing its lat­est monthly re­port, the In­ter­na­tional En­ergy Agency said Wed­nes­day the de­ci­sion by US Pres­i­dent Don­ald Trump to with­draw from the Iran deal had “switched the fo­cus of oil mar­ket anal­y­sis from the fun­da­men­tals to geopol­i­tics.”

Oil prices, which had al­ready risen on the back of steady de­mand growth and a land­mark deal by oil pro­duc­ing coun­tries to lower out­put, had now surged to above $77 per bar­rel the IEA noted.

“In these early days, there is un­der­stand­able un­cer­tainty about the po­ten­tial im­pact on Iran’s oil ex­ports” be­cause of U.S. sanc­tions, it said. When sanc­tions were im­posed back in 2012, Ira­nian ex­ports dropped by about 1.2 mil­lion barrels per day. The IEA said it would have to ex­am­ine whether other pro­duc­ers could step in to en­sure an or­derly flow of oil to the mar­ket and “off­set a dis­rup­tion to Ira­nian ex­ports.”

Shortly af­ter the U.S. an­nounce­ment, Saudi Ara­bia ac­knowl­edged the need to work with pro­duc­ers and con­sumers to mit­i­gate pos­si­ble sup­ply short­falls.

IEA of­fi­cials stressed that cri­sis-hit Venezuela was another risk to the global oil sup­ply. “In Venezuela, the pace of de­cline of oil pro­duc­tion is ac­cel­er­at­ing and by the end of this year, out­put could fall by sev­eral hun­dred thou­sand barrels a day.” Oil de­mand at the start of 2018 was sup­ported by cold weather in the U.S. and Europe as well as by new petro­chem­i­cal ca­pac­ity in the U.S.

“While the eco­nomic en­vi­ron­ment will con­tinue to support oil de­mand, as­sis­tance from harsh weather con­di­tions will van­ish, and the re­cent jump in oil prices will take its toll,” the agency ar­gued.

Venezue­lans are be­ing faced with crip­pling ga­so­line short­ages amid mount­ing prob­lems for the coun­try’s oil in­dus­try. It’s a source of frus­tra­tion in a coun­try that has the largest crude oil re­serves in the world.

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