• Thursday, March 28, 2024
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Iran sanctions won’t lead to higher oil prices- U.S

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As the global oil market becomes apprehensive that the further sanction on Iran may lead to higher crude oil price at the international market, the United States of America has assured that the action would not lead to increase in price of oil.

This may be good news for Nigeria given the fact that she is a net importer of refined petroleum products. If the prices remains low at the international market the Nigerian National Petroleum Corporation (NNPC) may not have to pay too much for imported products.

Despite the fact that Nigeria is a major producer of crude oil for the global oil market it has not been able to refine products locally. Any spike in the price of crude oil means that the country would spend more importing petroleum products.

The Federal Government budgeted about N305 billion for fuel subsidy in its 2019 budget.

The country paid about N1.7 trillion on fuel importation in the year 2018 This is because the 450,000 capacity refineries have been in comatose for so many years.

Brian Hook, the US’ special representative for Iran, stated this at an Atlantic Council forum in Abu Dhabi .”All I can say is that certainly when we have a better supplied oil market, then that will put us in a better path to reducing Iranian crude exports to zero,”

Nigeria has been paying hugely on importation of fuel because of the increase in the price of crude oil at the international market

Hook expanded on the US’ sanctions strategy, saying the Trump administration can continue to use the measures to pressure Iran while maintaining low oil prices for consumers.

Booming US output, as well as increased supplies from Saudi Arabia, Russia and other major producers, oil prices have eased despite the Trump administration’s reimposition of sanctions on Iran in November.

But as OPEC and its allies implement production cuts to bolster prices, US officials say they will be closely monitoring the market in considering whether to extend waivers that allow eight countries to continue buying Iranian oil

The waivers — for China, Greece, India, Italy, Japan, Taiwan, Turkey and South Korea — expire in May.

According to platts ,Oil prices have rallied by about $9/b since Christmas Eve, with Brent futures trading at $59.34/b as at Monday, this week. This is as Saudi Arabia signaled it had already slashed its production by some 400,000 b/d in December and would over comply with its quota under the OPEC/non-OPEC cut agreement, which runs for the first six months of this year.

Asked why the US wants to keep the price of crude low while at the same time slamming sanctions on Iran. He said: “To date we have, and there’s no reason to think that we couldn’t continue to do that. US producers were able to increase production by 1.4 million b/d within that period, and that was production that we exported.

The Saudis increased production. After what happened with Venezuela and Libya, it was a tight market, and then we came on with Iran and took off another million barrels. So I think we’ve seen very good cooperation to ensure a well-supplied and stable oil market. Iran accounts for a small percentage of total oil production. Iranian exports have gone from 2.7 million barrels per day to under a million barrels per day, and now oil is at $60/b, so we have been very successful in balancing our national security interests with our economic interests.

 

Olusola Bello with agency report