US sanctions against importers of Iranian oil threaten the crude oil market’s precarious balance and risk surging prices, all under Saudi Arabia’s watchful gaze, according to experts.
“In the next weeks all eyes will be on Iranian exports, whether there will be some cheating around US sanctions, and on how quickly production will fall,” said Riccardo Fabiani, an analyst for Energy Aspects.
Going after Iran’s oil money will hit Tehran where it hurts, but it also means hitting a major pillar of the global oil market — Iran is the OPEC cartel’s third-largest producer — with major consequences for world supply.
Iran exported the equivalent of 2.5 million barrels a day in April, before the announcement of sanctions turned buyers away.
“Even if the United States grants exemptions, Washington will demand that the volume imported from Iran be significantly reduced,” said UBS analyst Giovanni Staunovo, who expects prices to rise.