By Staff Writer
Iranian crude production fell yet again in August, largely thanks to the threat of US sanctions on its oil industry that come into place in November, while Energy Information Administration reports that the squeeze on Iranian oil could lead to a spike in oil prices.
Iran’s daily oil exports fell to 3.52 million barrels per day (b/d) in August, a massive drop of 200,000 b/d compared with July. Iran’s oil production has dropped by 310,000 b/d since April, thanks to Donald Trump’s decision to pull the US out of the Iranian nuclear deal in May and reimpose sanctions on Iran.
The first round of sanctions, which came into place in early August, targeted Iran’s ability to use the US dollar as well as its export industry, but the second round, due in November, will target Iran’s oil industry and Central Bank.
The Trump administration vowed to get Iranian oil exports down to zero before the sanctions went into place and have leaned heavily on US allies in Europe and Asia to get them to cut ties.
Rising Oil Costs
The Energy Information Administration explained on Tuesday that further declines in Iranian oil exports could lead to the price of oil rising to $80+ per barrel. But when sanctions snap back on November 4, S&P Global Platts Analytics estimates that 1.44 million b/d of Iranian crude and condensate will leave the market.
The US has tried to counter the effects of this on the rest of the world, by encouraging other oil-producing countries to increase their production and this has been quite successful. Indeed, OPEC crude production increased to 32.56 million b/d in August, a rise of 230,000 b/d compared with July.
US Energy Secretary Rick Perry met with his Saudi counterpart on Monday to discuss further increases in its production of oil and will meet with his Russian counterpart in Moscow on Thursday for the same reason.
Effect on Iranian Economy
It is undeniable that the sanctions and the threat of further sanctions are having a major impact on the Iranian economy. After all, many business and countries have already cut, or announced plans to cut, their ties with Iran by November.
It is important to note that the oil industry provides the majority on the Iranian GDP, but it also important to remember that the money raised does not go to the Iranian people, but is instead spent on domestic repression and the Iranian Regime’s terrorist activity. These sanctions are hurting the mullahs not the people.
