• International companies are preparing to comply with the US decision to stop the import of Iranian oil


    *Osama Suleiman from Vienna


    The International Agency of Oil Information "Platts" said that the US sanctions, which will be re-imposed on Iranian crude oil customers, would enter into force on November 5. It pointed out that the US Treasury has already issued instructions to countries importing Iranian oil to accelerate the reduction of large imports in the next six months, in the framework of the implementation of international sanctions on Tehran after the US withdrawal from the nuclear agreement.


    A recent report from the Agency -based on data from international energy companies- said that Japan and South Korea could make the largest relative reductions in imports of Iranian oil, while China, India and Turkey still uncertain.


    The report highlighted the differences in European attitudes towards the crisis of the return of sanctions that imposed on Iran.

    Some European leaders are considering the possibility of legislation that hampers the application of the US sanctions in EU countries. European companies are expected to comply with the US decision, especially those with low risk due to their extensive dealings with the US banking system.

    Most analysts expect the sanctions to cut Iran's oil exports by at least 500,000 bpd, which would represent a significant discount to the global market.

    The report pointed to other estimates indicate that the reduction of Iranian supplies will be between 100 thousand and 200 thousand barrels per day minimum, and 800 thousand barrels per day maximum.


    It also pointed out that Iran has supported in the past period of oil exports by about one million barrels per day since the lifting of economic sanctions under the nuclear agreement, which was implemented as of January 2016.

    Iranian production rose to 3.83 million bpd in April, according to Standard & Poor's.


    The report quoted officials in "Rapidan" Energy as they were saying that about 200 thousand barrels per day of crude would be withdrawn from the market by the end of this year.

    It is with the potential to rise to 500 thousand barrels per day in the first half of 2019 if there won't be new nuclear agreement between Iran and the United States and the rest of the international powers as an alternative to the previous agreement, which is flawed and canceled by the US side.


    In another forecast, the Platts agency cited data from ClearView Energy Partners predicting a drop in supply by 450,000 barrels per day by the end of the year.


    The Treasury Department has set a 180-day deadline for international companies to avoid entering into deals that include buying Iranian oil or other petrochemical and oil-related deals in upstream, seaport, shipping, shipbuilding and dealing with Iran's central bank.

    The international report noted that the State Department would consider granting sanctions exemptions to countries that make "substantial cuts" in their imports every 180 days, although the evaluation criteria are expected to remain ambiguous.

    It pointed out that the US administration is looking for reductions by 20%, but takes into account many other factors.


    Washington expects countries to begin substantial cuts in the first 180 days.

    At a time when the US State Department would monitor the matter and assess the efforts of each country to reduce the volume of crude imported from Iran, including the quantity and reduction ratio.

    It also tracks cases of termination of future Iranian oil deliveries and other measures demonstrating a commitment to reduce these purchases to a large extent.

    The report of the international agency "Platts" noted that it is likely that the attainment of crude oil prices of $ 80 per barrel pressure factor by the US administration to be more pressing on Iranian oil buyers for further reductions.

    The report suggests that a price hike above this level could trigger alarms in Congress as the US citizens feel the pressure of fuel prices, especially during this summer's peak season.

    "Prices over the past week have made good gains and crude oil futures have gained support from geopolitical factors in the Middle East, especially in Syria," it added.


    In a related context, the Organization of Petroleum Exporting Countries "OPEC" with the European Union explored issues of oil and global energy.

    They also exchanged observations on the views of producers and consumers on market developments, and emphasized the strong and sustained support for the EU-OPEC dialogue that began in 2005.

    This came during the visit of the European Commissioner for Budget and Human Resources and the former Commissioner for Energy, Günter Oettinger, to the headquarters of the Organization in Vienna, where he held important talks with the Secretary General of the United Nations, Mohammed Barkindo.


    The OPEC Secretariat made a presentation on recent developments in the oil market, the historic "Declaration of Cooperation" between 24 producing countries both inside and outside the Organization and the future role of crude oil in the energy mix.

    "OPEC is looking forward to engaging with all stakeholders, including consumer nations and the European Union, to better understand the risks they face when making decisions and developing the policies needed in order to develop the future global energy mix in decades," Barkindo said.


    Oil prices fell at the end of last week, retreating from their initial gains. while it seemed likely that the allies of the United States will urge to maintain the nuclear agreement with Iran, which could keep Iranian crude supplies on world markets.


    In another sign that global supplies may continue to rise, data showed that the number of oil drilling rigs active in the United States increased by ten diggers this week.


    According to Reuters, although the decline, but crude prices remain near their highest levels in more than three and a half years.

    Brent crude closed for the week at $ 77.12 a barrel, not far from the $ 78 it hit on Thursday, its highest level since November 2014.

    And Brent contracts ended the week with gains of 2.8 per cent.

    US WTI crude fell 66 cents to settle at $ 70.70 per barrel, compared to a three-and-a-half-year high of $ 71.89 recorded in Thursday's session.

    For the week, US crude gained 1.2 per cent.


    The US natural gas inventories rose 89 billion cubic feet in the week ending May 4 to reach 1432 billion cubic feet, as official data from the US Energy Information Administration showed.

    The rise in US inventories of natural gas comes more than the expected 81 billion cubic feet in the same period, as the futures contract would be at $ 2.81 per million British thermal units.

    US oil companies added oil refineries for the sixth consecutive week as crude prices continued to rise to their highest level in more than three years on expectations that new sanctions on Iran would block some supplies from the market, giving further support to oil drilling activities in America and raise production to record levels.


    "Energy companies added 10 oil excavators in the week ending May 11 to a total of 844 diggers, the highest since March 2015," Baker Hughes Energy Services said in its closely monitored weekly report.

    This is the first time since early March that US energy companies have been adding oil diggers for six consecutive weeks. More than half of the oil drillings are in the Permian Basin in West Texas and eastern New Mexico, the largest rocky oilfield in the United States.

    The number of active dredges there increased by five to reach 463, the highest since January 2015.

    The US government expects oil production in Permian to rise to a record near 3.2 million bpd, about 30 percent of total US oil production.


    The total number of active oil drillings in America, a preliminary indicator of future production, is much higher than a year ago when it reached 712 diggers.

    Energy companies are increasing production in line with OPEC's bid to cut supplies in an effort to capitalize on rising prices. The US Energy Information Administration forecast that the annual average of US oil production would rise 1.37 million bpd to a record of 10.72 million bpd in 2018, and 11.86 million bpd in 2019.


    Since the beginning of the year, the total number of active oil and gas rigs in the United States has reached 983, up sharply from an average of 876 in 2017.

    It is heading towards recording the highest average since 2014 when it reached 1862 diggers, and most of the excavators produce both oil and gas.​

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