Breaking News

OPEC in no hurry to offset possible loss from Iran’s oil flow after US sanctions: Sources

OPEC says it is too soon to decide whether to increase production to make up for any loss in supply from Iran’s exports following US announcement that it would impose new sanctions on Tehran.

According to Press TV, the Organization of the Petroleum Exporting Countries (OPEC) has ruled out the body has any immediate contingency plans for offsetting a potential loss in Iran’s oil flow to the market following a declaration by US President Donald Trump that he is re-imposing economic sanctions on Iran that had been suspended as part of a nuclear agreement in 2015.

A source within OPEC said Thursday that the organization was not yet convinced that a re-imposition of oil sanctions on Iran would really affect the global oil supply.

“Too early to judge,” said the source, adding that under the previous round of sanctions, Iran had been able to keep much of its exports flowing.

Another source said if sanctions could have any impact on Iran’s oil exports, the decline would not be immediately felt in the market as it would take at least six months to see any loss in supply.

“I think we have 180 days before any supply impact,” said the source, adding that US sanctions on Iran’s oil sale require buyers to decrease the amount of their oil imports from the country by 20 percent every six months.

Governments in Europe, to where around half a million barrels of Iran’s oil are exported each day, have officially announced that despite Trump’s controversial decision, they will remain in the Joint Comprehensive Plan of Action, an international document which was the result of years of negotiations between Iran and the 5+1 group — the US, Britain, France, Russia and China plus Germany– in July 2015. The deal lifted sanctions, including those related to Iran’s oil industry, in return for a series of restrictions on Tehran’s peaceful nuclear program.

The reluctance of Europeans to decrease oil purchases from Iran may seriously undermine Trump’s efforts to economically isolate the country. The bulk of Iran’s oil exports, which are around two million barrels per day, go to Asian customers.

A third OPEC source said Thursday that the best option for the organization would be to wait and see whether the sanctions could affect the overall supply in the oil market.

He said OPEC clearly considered a review of a deal that runs to the end of 2018 and allows a major cut in supply, but insisted that the best decision for the time being would be for the body to sit tight and monitor the situation.