In August, we learned that Iranian oil exports reached a record high largely because the Biden administration was trying to keep the market well supplied and oil prices low as Iran ramped up production. He reported that this was because he chose to turn a blind eye. The price response to escalating tensions in the Middle East has so far been muted. However, the Israel-Gaza war is likely to trigger a major change in US policy toward Iran due to America’s overt support and support for Hamas.
Commodity analysts at Standard Chartered estimate that Iran’s output has fallen to 1 million barrels per day (mb/d) due to a decision at the end of the first Obama administration to tie trade policy to imports of Iranian oil by major consuming countries. d) pointed out that it has been reduced by more than
Restrictions were subsequently eased after the signing of the Joint Comprehensive Plan of Action (JCPOA) in 2015. However, after the US withdrew from the JCPOA during the Trump administration, restrictions were tightened again, and production in 2020, when exemptions were granted, fell below 2 megabytes per day. Exports to consuming countries have been withdrawn. Iran’s oil production and exports have increased sharply under the Biden administration, with output reaching 3 million barrels per day, and this year’s output reaching 500,000 barrels per day. export Just under 2MB/day.
Earlier, there were reports that the United States and Iran had resumed talks on the nuclear deal and that there was progress, which could lead to the easing of sanctions on Iran’s oil exports.of israel Haaretz newspaper report Negotiations are progressing more rapidly than expected and an agreement could be reached within weeks. Related: Sheffield: Oil prices will soar if Iran enters conflict with Hamas and Israel
Terms of the deal are likely to include allowing Iran to halt its uranium enrichment activities by more than 60% in exchange for allowing it to export 1 million barrels of oil per day. A successful nuclear deal could change the oil market, with former Iranian oil minister Bijan Namdar Zanganeh saying his biggest dream has always been to increase Iran’s oil production to 6 million barrels a day. Stated.
However, recent Iranian claims are Helped Hamas plan an attack on Israel It is very likely to seriously strain relations between Washington and Tehran. StanChart stated that the United States has three broad policy options regarding Iranian oil production: (1) maintain the status quo, with production at least 3 megabytes per day; (2) increase production before 2023; A plateau would be close to 2.5 megabytes per day, or (3) exports would be almost zero at production levels of less than 2 million per day, which was achieved at the end of the Trump administration.
Analysts note that just a week ago, Option 1 was the most convenient policy for the United States, both from a market leverage and geopolitical perspective. However, recent developments in the Middle East have highlighted options 2 and 3 as potential policy goals.
Source: Standard Chartered Research
European gas prices soar due to Israeli gas field closure
The oil market appears to have been largely unaffected by the Israeli crisis, although Israel’s Tamar gas field was preemptively shut down. Chevron Corporation (NYSE:CVX) sent European gasoline prices soar Even though the continent is flush with the product. StanChart estimates that the closure reduced Israeli production by about 28 million cubic meters per day (mcm/d) and increased natural gas prices in Europe by 15%.
Stan Chart said exports from Israel to Egypt typically come from the Leviathan field, but the Tamar outage is likely to have a knock-on effect, with early indications that exports will drop to about 5mcm/day from the usual 23mcm/day. It is pointed out that the number is decreasing. . In theory, a decline in exports to Egypt could affect the European market.
Possibility of Egypt loading LNG cargo. StanChart observes that these concerns are somewhat exaggerated as the number of cargoes at risk is small, if not zero. In fact, Egypt’s domestic demand is so strong that no cargo was exported in September.
In their defence, European gas markets also face supply risks beyond Tamar, including renewed concerns over strike action at some LNG facilities in Australia and the suspension of a two-way interconnection pipeline between Estonia and Finland. confronting. Damage to the Baltic Connector pipeline and adjacent communications cables is being treated by the Finnish investigation as a potential act of sabotage. Although the pipeline itself is relatively unimportant within the EU’s supply system, it could raise market concerns about the possibility of other important pipelines being blocked.
European gas inventories continue to rise despite concerns over potential supply losses prevailing. Stocks hit a record high of 112.92 billion cubic meters (bcm) on October 8, representing 97% of storage capacity, according to data from Gas Infrastructure Europe (GIE). The year-over-year growth rate is 9.41 bcm, and the above-average growth rate over the past five years is 11.75 bcm. According to Stanchart, the start of large-scale stock withdrawals is likely to be delayed and the EU is likely to end the exit season with very high stocks, potentially well above 70bcm, with early forecasts This suggests that winters in Europe will be very mild. In contrast, four weeks after the invasion of Ukraine, the 2021-22 withdrawal season ended with stocks at just 29 bcm, and the 2017-18 withdrawal season ended with stocks below 20 bcm.
Written by Alex Kimani, Oilprice.com
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