The Trump administration on 22 April announced that it will not extend sanctions waivers it had granted to certain buyers of Iranian oil beyond 2 May as the USA aims to completely halt Iran’s oil exports
The decision to stop issuing sanctions waivers would threaten the cessation of all Iranian oil purchases, which averaged at least 1.5 mbpd in Q1 2019, according to a Jadwa Investment report.
Brent oil prices are currently around US$75 per bbl, a six-month high, having recently gained on the back of the US decision, the report stated.
Jadwa Investment expects to see a new agreement allowing for a higher allocated level of oil production for OPEC and partners (OPEC+) when they next meet either in the Joint Ministerial Monitoring Committee (JMMC) at the end of May or at the OPEC conference at the end of June. However, the OPEC+ agreement may be disbanded altogether, it added.
OPEC oil production for Q2 2019 and for the rest of 2019 will be determined by the US decision not to renew waivers that allowed nine countries to buy Iranian oil without being subject to US sanctions.
The report noted that at least 1.5 mbpd of oil (equivalent to purchases from the five largest customers in Iran in Q1 2019) will have to be supplied from other sources.
OPEC crude oil production was down five per cent year-on-year and six per cent quarter-on-quarter in Q1 2019 as moderation in output was maintained as per an agreement outlined late last year.
China being one of the world’s biggest importers of Iranian oil, apart from India, denounced the Trump administration’s announcement.
Chinese foreign ministry spokesperson Geng Shuang said, “China opposes the unilateral sanctions and so-called ‘long-arm jurisdictions’ imposed by the US. Our cooperation with Iran is open, transparent, lawful and legitimate, thus it should be respected.”
