The US restrictions targeting Iran come into force on November 4. Oil prices have grown to $82 per barrel as investors are waiting for them. The sanctions come at a time when US President Donald Trump is insisting that OPEC increase oil production to substitute Iranian exports, something that the organization, as well as Russia and other producers, have refused to do.
“The unwillingness of the 25 producing nations to declare their intention to ramp up production in their effort to replace Iranian barrels all of the sudden produced a very tight supply and demand balance for the fourth quarter of this year,” Tamas Varga, senior analyst at PVM Oil Associates, said in a research note quoted by CNBC.
“As a result, the talk is now (of) Brent reaching $100 a barrel this year,” he added.
Iranian crude could vanish between 500,000 barrels per day (bpd) to 2 million bpd. In May, Iran was exporting 2.7 million bpd – around three percent of global consumption.
EU, Russia, China, and Iran will create a special purpose vehicle (SPV), a “financially independent sovereign channel,” to bypass US sanctions against Tehran and breathe life into the Joint Comprehensive Plan of Action (JCPOA), which is in jeopardy. “Mindful of the urgency and the need for tangible results, the participants welcomed practical proposals to maintain and develop payment channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate payments related to Iran’s exports, including oil,” they announced in a joint statement. The countries are still working out the technical details. If their plan succeeds, this will deliver a blow to the dollar and a boost to the euro. Media reports