The global oil market has not been affected by the recent move by the US President Donald Trump regarding the Joint Comprehensive Plan of Action (JCPOA) agreed with Iran and six other powers in 2015, Iran’s Petroleum Minister, Bijan Namdar Zanganeh is quoted as saying by the Business Standard.
According to Zanganeh, the market remained unfazed as oil prices remained on the same level despite Trump’s move.
Namely, last week Trump chose not to recertify the JCPOA claiming Iran violated the deal on multiple occasions, and now the Congress has 60 days to decide whether or not to reimpose sanctions.
Even though he did not specifically ask the Congress to impose sanctions, Trump is said to be aiming to “fix” the deal.
However, the US cannot reimpose the sanctions without the approval of France, the United Kingdom, Germany, the European Union, Russia and China, as well as Iran.
Nevertheless, US senators are drafting legislation, reportedly to make the re-imposition (snapback) of sanctions automatic if certain conditions are met.
According to Gibson’s tanker market report, the worst-case scenario for the tanker markets, if a solution cannot be found, is that Iranian exports to Europe will cease, although exports to China, India, Korea and Japan may well continue, as they did when sanctions were in place.
As explained, lower demand for Iranian oil would likely force production lower, whilst the National Iranian Tanker Co (NITC) may find its tradability impacted, and be forced to return some VLCCs to storage duties.
“On the face of it, any reduction in Middle East exports is negative for crude tanker demand,” Gibson’s report reads.
“Yet what really matters is total volumes out of the Middle East, as opposed to Iran alone. In fact, the impact would be offset if other Gulf states were to make up for any Iranian shortfall. An additional benefit for the wider tanker market may be found as any rising exports from other Gulf states would be carried on non-Iranian tonnage.”
“There is, however, no guarantee that any fall in Iranian production would be met by increases elsewhere in the Middle East. In fact, OPEC could use such declines to accelerate the balancing of the market.”
Nevertheless, before anything is decided, European leaders appear committed to the existing deal, whilst many western firms (Airbus, Boeing and Total to name a few) have become major stakeholders in Iran.
Therefore, there appears very little appetite amongst other JCPOA signatories to return to the sanctions’ era, Gibson said.
Last week, the EU urged US politicians to preserve the deal so as to maintain international security especially in the light of tensions with the North Korea.
Following the easing of sanctions against Iran by the US and five other world powers, Europe has been eager to revive maritime trade relations with Tehran, sending its shipping majors and port officials to ink new and renew old cooperation deals.
Aside to increased activity in the carriage of oil, container lines have reestablished or augmented their services into Iran, Korean yards have booked orders from Iranian owners set on renewing their outdated fleets and shipping registers have rushed to the country to resume or deepen their relations with Iranian shipping market.
World Maritime News Staff