High price fears may be unjustified. File Image / Pixabay
Will the near-universal concern of crude analysts - that U.S. sanctions against Iran and other factors will conspire to tighten the market and cause prices to skyrocket - be proven wrong by events on Tuesday?
That seems to be the question in the wake of Mike Pompeo, U.S. secretary of state, announcing that Washington will consider requests from some countries to be exempted from not being allowed to buy oil from the Islamic Republic.
Previously, U.S. president Donald Trump said he wanted exports from Iran to drop to zero by November, and countries such as South Korea immediately cancelled doing business with Iranian suppliers.
Eshaq Jahangiri, vice president, Iran
We will make Americans understand...that they cannot stop Iranian oil sales
According to the text of an interview in Abu Dhabi with Sky News Arabia released by the U.S. State Department, Pompeo said, "There will be a handful of countries that come to the United States and ask for relief from that. We'll consider it," but he did not specify who might be exempted or for how long.
Earlier this week, it was reported that the foreign and finance ministers of Germany, France, and Britain, as well the European Union foreign-policy chief, asked the U.S. in a letter dated June 4 to spare EU firms doing business with Iran from punitive measures.
Additionally, France's Total and the Netherlands' Maersk have stated it will be impossible to stay in Iran unless they receive explicit exemptions from Washington.
Of course, another sign that the sanctions may not cause price chaos in the crude market comes from belligerent Iran itself: on Tuesday its vice president, Eshaq Jahangiri, conceded that the sanctions would hurt the economy, but he promised to "sell as much oil as we can."
He added, "We will make Americans understand this year that they cannot stop Iranian oil sales."
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) wants the world to know that it's not to blame for the higher oil prices so famously criticized by Trump: its president, Suhail al-Mazrouei, told Reuters, "OPEC alone cannot be blamed for all the problems that are happening in the oil industry, but at the same time we were responsive in terms of the measures we took in our latest meeting in June."
While fear of a tightening market has dominated headlines for the past few weeks, a few lone voices have insisted that the fears are unfounded: last week, Seaport Global Securities argued that European and Arab countries along with the Americans can easily compensate for any supply shortages, and it forecast prices in the $60s rather than anything higher.