OPEC+ Oil Cuts Jeopardized by Iran Waiver Termination

OPEC+ Oil Cuts Jeopardized by Iran Waiver TerminationOPEC+ Oil Cuts Jeopardized by Iran Waiver Termination

As the US ends waivers that let countries buy Iranian crude, this threatens to squeeze oil supplies in an already tight market. 
The decision may also jeopardize the deal that OPEC and allied suppliers including Russia reached to limit output until the end of June to buttress crude and avert a glut, Bloomberg reported.
The producers are to meet next month to assess the market and again in June to decide whether to extend cuts.
Curbing Iran’s production capabilities “is going to make an already tight market even tighter, especially with supply risks in Libya and Venezuela,” Petromatrix Managing Drector Olivier Jakob wrote in a report. 
Recent battles in Libya put the country’s oil exports at risk, while Venezuelan exports have slumped amid a political crisis.
The US decision will make it harder for OPEC and its allies to maintain supply discipline. Russia has already signaled that the cuts may not need to be extended after they expire in June, and its economy minister, Yevgeny Yelin, sees the nation’s crude and condensate output increasing slightly in 2019, according to its five-year outlook.
The current output-cuts agreement was driven by Saudi Arabia after the US blindsided the kingdom last year by granting waivers -- a decision that triggered a sell-off and a slide in crude prices. 
Since then, the Saudis and Russia have led the so-called OPEC+ coalition in sharply cutting output. Yet if Saudi Arabia pledges to boost output to a certain level to offset Iranian losses, it will have a hard time persuading others to limit their own production.

Add new comment

Read our comment policy before posting your viewpoints