SHIPMENTS: The return of Iranian barrels is likely to be delayed until at least mid-2016, meaning there will be no supply gut in the near future. Barclays Capital analysts led by Mike Cohen in New York said Friday that the market has priced in Iran’s return as highly likely, and it is anything but.
Treasury Secretary Jack Lew recently noted in a Congressional Testimony that there is no immediate change to United Nations, E.U., or U.S. sanctions on Iran. Only if Iran fulfills all of the necessary conditions will phased sanctions relief begin.
Iran will continue to be denied access to U.S. financial and commercial markets. Moreover, congressional provisions allow the U.S. to re-impose sanctions ‘in a matter of days’ in worst case scenarios, in instances where politics take over reasoning.
Buyers of Iranian oil will remain cautious about adding large volumes of Iranian oil to their crude oil order books as long as this remains a possibility, meaning that Iran will have to sell more oil on a spot basis.
The latest statistics, provided by consulting firm Windward shows that Iranian floating storage has not moved markedly and still stands at about 50 million barrels of quickly-marketable oil.
Cohen also wrote today that he thinks it is highly likely that Saudi Arabia will curb some of its output as it has done in the past five years by at least 200,000 barrels from August to October. The country uses roughly one million barrels daily in the summer months.
Saudi Arabia is producing at high levels of between 10.3 million barrels and 10.5 million barrels daily, according to the International Energy Agency and OPEC.
