Oil’s in a Bear Market Again

Cornelia Mascio
Novembre 9, 2018

On Monday, as part of the Trump administration's "maximum pressure campaign" to get Iran to change its behavior, the US reimposed oil and banking sanctions on Iran that were lifted under the 2015 nuclear deal.

In Moscow's first official reaction since the restoration of Washington's bans on Tehran, Russian Foreign Minister Sergei Lavrov said on Tuesday that the United States sanctions are "not legitimate". "OPEC has put on more crude than we thought and second of all, these waivers are becoming an impediment to price support".

Lavrov emphasized that Russian Federation and its European partners were looking for ways to maintain economic ties with Iran.

"After extensive consideration, the Secretary (of State) has provided for an exception from imposition of certain sanctions under the Iran Freedom and Counter-Proliferation Act of 2012, with respect to the development of Chabahar Port, construction of an associated railway and for shipment of non-sanctionable goods through the port for Afghanistan's use, as well as the country's continued imports of Iranian petroleum products", a US State Department spokesperson was quoted as saying by PTI.

The agreement with Iran to cap its capacity for nuclear arms development called the Joint Comprehensive Plan of Action (JCPOA) had been arrived at between Iran and six other countries, viz., the United States, Germany, France, UK, Russia and China. Big power disunity and European Union moves to circumvent Trump's sanctions regime have given Tehran a psychological boost - but not dissuaded foreign businesses ranging from oil majors to trading houses and shipping concerns from pulling out of Iran for fear of incurring new United States penalties. Moreover, Trump's sanctions against Iran's financial sector essentially make 30 banks and their subsidiaries off-limits to foreign lenders, undermining its means to facilitate trade.

Oil's set for its longest stretch of declines on record after entering a bear market, with investors awaiting a weekend meeting of OPEC and its allies to discuss output strategy. "That number will fall farther", Pompeo said.

There was no need for India to cravenly accept the U.S. sanctions on Iran.

South Korea is a large buyer of Iranian condensate, a super light form of crude oil, used by its large petrochemical industry.

Iranian officials have said the waivers provide proof that the United States can not achieve its goal of cutting off all of Iran's oil exports. The oil import bill for the current financial year, 2018-19, is expected to rise to $125 billion, i.e., by 42 per cent. "The US has given waiver to some countries including India". Shortly after that the White House announced they would re-impose unilateral sanctions against the Islamic Republic. To defy the United States sanctions and preserve its strategic autonomy would require a break from this strategic alliance - something which the Modi regime can not even contemplate. While ordinary Iranians struggled, Iran's clerical and security establishment and business world sought kept the economy running by means including resorting to barter as well as foreign currencies other than the USA dollar.

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