US President Donald Trump's unilateral decision to withdraw from the Iran nuclear accord could knock 5% of global oil production offline and drive the oil price to unpredictable highs, the chief executive officer of Russian oil giant Rosneft said.
Speaking at the St. Petersburg International Economic Forum on Friday, Igor Sechin, who is reportedly close to Russian President Vladimir Putin, added that the US decision would cause an inevitable reduction of Iranian barrels in the global supply pool, Forbes reported.
On a day when oil futures are sliding on expectation of higher Russian and Saudi production—amid signals that the ongoing OPEC and non-OPEC production cut agreement to the tune of 1.8 million barrels per day might be canned, Sechin opined that actually new price records might be on the horizon due to the unilateral US action.
"Such sanctions and ultimatums applied to the hydrocarbons market will inevitably lead to a permanent 'sanctions premium' in the price. I do not rule out that we will be able to speak about a sanctions-related commodity 'super cycle' after a while, and see new price records in the near future," the Rosenft boss said.
Sechin said drivers and industries across Europe and the US will feel the effects of action taken by the White House, as the revoking of the Iran nuclear deal makes the global oil sector unpredictable.
"I have to say that the US has consistently pursued the policy of non-acceptance of international agreements, which would allow challenging their actions on global platforms. In fact, judicial protection and fair market arbitration are off the table," he said.
Sechin did not mention Trump directly in his address, but said the US move had much to do with boosting its domestic oil market confidence. Moving away from the politics of the Iran deal withdrawal by Trump, the Rosneft boss also dismissed suggestions of oil consumption peaking in 2030, adding that he expects oil and gas to remain at the core of global economy in the foreseeable future.
"Projections by leading analysts and companies, including an outlook on global energy development recently released by BP show that demand for hydrocarbons will be higher by 2040 than it is today, even in most challenging scenarios," he said.
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