Last week, Trump's administration announced that no six-month exemptions to eight countries would be renewed to continue buying limited amounts of Iranian oil, a move that shocked experts, and sent the global oil market for an uneven week. Trump is in dire condition as he tries to completely cut Iran from international oil markets, putting pressure on the nation's economy to push Tehran to bow to US demands while trying to keep gas prices low in the US.
It was already a tough balance to beat, but it has been made almost impossible now, as it has been discovered that Russia has exported contaminated crude oil, clogged up European refineries and made an already fragile oil market even more volatile than before. Last week, after crude oil emerging from the urral mountains through the Druzhba pipeline was found to be contaminated, European oil refineries did not stop importing oil, not only from the region, but also from Russia as a whole, which affected exports from Ust- Luga export terminal in the Baltic region as well. New reporting shows that the oil was apparently "deliberately polluted" at the private Samaratrans terminal, according to Russia's oil pipeline operator Transneft. Altogether, it constitutes slow-rooted Russian crude oil to approx. 1[ads1].5 barrels a day heavier crude oil which is now missing from the market. Add this to huge amounts of Iranian oil that the United States hopes to jaw off and there is no way the market will not feel pressured.
Oil prices have already increased this year, but last week announced that Trump's administration would end up with Iranian raw deviations, known as "significant reductions exceptions," sending insecure references even higher. Currently, the gas price has risen by almost 30 percent since the beginning of the year, and is now only 10 cents from reaching the top price from 2018. Related: US Pipeline Boom May End in Crisis
It's a special pressure on heavier oil, with heavier crude oil from Russia compromised, and heavily Venezuelan crude sanctioned on top of Iranian oil sanctions and problems with other heavy crude producers such as Angola, facing their own production difficulties. Countries that continue to produce in high quantities, such as the United States, deliver a much lighter crude that does not satisfy the same sectors of the market. As a result, large crude prices have borne the clamp, which is higher and higher.
Further, the matter complicates, the Organization of Petroleum Exporting Countries (OPEC) has not shown any indication – despite Trump's production – that you will pump more oil to compensate for the loss of crude oil thanks to US sanctions against Iran and Venezuela, not to mention the polluted Russian crude oil. Representatives from the OPEC countries, including Kuwait and Saudi Arabia, have been on record to say that they will not do anything to increase oil production and that their primary goal is to ensure stable oil prices and a balanced global market.
So far, the United States adheres to its decision to abolish sanctions, but many nations are doing their best to change Trumps minds. China and Turkey have publicly and severely criticized the severity of the sanctions, accusing the US of overriding, and some analysts speculate that the two nations may threaten US sanctions against Iran directly. Meanwhile, former recipients of India, South Korea, and Japan have lobbying campaigns in full swing to change their minds in Washington to expand their significant reduction studies. There has also been a fair amount of opinion column inches dedicated to whether India will buck US orders as well. Italy, Greece and Taiwan, for their part, do not need to invest in their own lobbying, as they never used their abnormalities in the first place.
By Haley Zaremba for Oilprice.com
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