Sanctions on Iran’s oil
USs refrain from renewing waivers to the 5 countries which were allowed to buy oil from Iran came as a shock to the oil market.
The US government, in line with its attempts to bring Irans oil sales to zero, did not renew waivers to countries buying Iranian oil. This decision did not appeal to any country but they had to accept in fear of getting punished by the US. China however, openly said it "opposes the unilateral sanctions." But US bullying is affecting the global market, in terms of price as well as quality; and quantity will also prove to be an issue.
US oil prices surged nearly 3% on Monday to $65.70 a barrel. Thats 54% up since prices closed at $42.53 a barrel on Christmas Eve. On May 2nd waivers to countries buying Iranian oil came to an end but the US refrained from extending their exemption. The US government asked Saudi Arabia and the UAE to fill the gap in the oil market.
OPEC members are required to behave in accordance with the rules and regulations of this organization and are not allowed to produce beyond the capacity defined for them. Officials of Saudi Arabia and UAE have several times announced that they will observe the regulations of OPEC in their oil production but its strange to see that these two countries, at the same time, promise the US that they will fill any gap left in the oil market.
Technically speaking, oil experts believe that Saudi Arabia and UAE will not be able to keep their promises for medium term or long term. Iran enjoys heavy crude oil which is much wanted in the market and it cannot be replaced by light crude oil unless for a short term but not medium or long term its negative effects will come to the surface before long.
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