Iranian Oil Minister Bijan Zanganeh said on Saturday that US President Donald Trump’s decision to quit a multinational nuclear deal would not affect Tehran’s oil exports if the European Union could salvage the pact.
After meeting with EU's Energy Chief Miguel Arias Canete, Zanganeh told reporters that every new decision in OPEC needs unanimity.
"I believe that if the European Union helps us... the level of the oil exports of Iran will not change," added the Iranian minister.
US Treasury indicated, following Trump’s decision on May 8, Washington would reimpose a wide array of Iran-related sanctions after the expiry of 90- and 180-day periods, including sanctions aimed at Iran’s oil sector and transactions with its central bank.
EU wants to salvage the nuclear deal, which offers the Islamic Republic relief from economic sanctions in exchange for curbs on its nuclear program. Europe sees the agreement as an important element of international security.
Meanwhile, BP Chief Executive Bob Dudley expects a flood of US shale and the reopening of OPEC taps to cool the oil market after crude rose above $80 a barrel this week.
Trump’s decision to exit an international nuclear deal with Iran and revive sanctions on the OPEC member country, as well as Venezuela’s plummeting output, has helped to lift oil prices to their highest since 2014.
Speaking to Reuters, Dudley said that BP sees oil falling to between $50 and $65 a barrel due to surging shale output and OPEC’s capacity to boost production.
“Clearly the withdrawal of the United States from the Iran nuclear deal has brought a lot of uncertainty to the market,” he said in an interview.
Crude exports from Iran, OPEC's third-largest member, could drop by 300,000 to 1 million barrels per day as a result of US sanctions, based on BP internal forecasts.
Dudley said he expected the figure to be “at the lower end” of the range.
US Energy Information Administration boosted its forecast of growth in domestic crude production in 2018 to an all-time high of 11.17 million bpd, as shale drillers accelerate activity.
The surge in US output has been offset by deep supply cuts for over a year by OPEC and other producers including Russia.
Saudi Arabia, assured key consumers that the world would have adequate supplies even if Iran’s exports dropped sharply.
Markets have so far been able to absorb oil’s rise without impacting demand growth, but Dudley said a sustained crude price of over $80 would be unhealthy, adding: "I think when you get above $80, it is not a healthy price either."
"Two years ago, when the price was $27, it was great for global growth, the engines of the consuming economies, but it was terrible for producing countries and that led to producing countries not being able to purchase things as well. That was not a healthy price," added BP Chief Executive.
Although International Energy Agency (IEA) this week cut its outlook for oil demand growth in 2018 due to rising crude prices, BP still expects consumption to expand by 1.7 million bpd, extending a period of strong growth.
The world has experienced an unprecedented decade of economic growth that is likely to continue even with sanctions and trade tensions between the United States and China, Dudley said.
"We’re about to begin to see political factors creating trade dislocations, sanctions and things like that. They will have impacts here and there but the overall economic growth rates appear to be not overheated," he said.
Commenting on Saudi Arabia’s claims that the situation on the global oil market remains unbalanced, Russian Energy Minister Alexander Novak said on Friday that it will take time to assess if oil prices remain volatile or not.
On Friday, oil prices fell but Brent crude was on track for a sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming US sanctions on Iran.
The global benchmark on Thursday broke through $80 for the first time since November 2014, and investors anticipate more gains due to supply concerns, at least in the short-term. Brent has gained about 20 percent since the start of the year.
US West Texas Intermediate crude futures for June delivery dropped 21 cents to $71.28 a barrel, a 0.3 percent loss. The contract was on track for a third straight week of gains.
