Oil price edges up after US State Dept decision on Iranian oil

By Luke Geiver | April 22, 2019

West Texas Intermediate oil traded at its highest rate in nearly six months today, reaching nearly $66/b.  The pricing reflects political turmoil between the U.S. and Iran. The U.S. Secretary of State office has announced it will not continue issuing significant reduction exceptions to existing importers of Iranian oil.

The State Department said this:

The Trump Administration has taken Iran’s oil exports to historic lows, and we are dramatically accelerating our pressure campaign in a calibrated way that meets our national security objectives while maintaining well supplied global oil markets. We stand by our allies and partners as they transition away from Iranian crude to other alternatives. We have had extensive and productive discussions with Saudi Arabia, the United Arab Emirates, and other major producers to ease this transition and ensure sufficient supply. This, in addition to increasing U.S. production, underscores our confidence that energy markets will remain well supplied.

In a fact sheet circular, the State department provided information on several topics to explain why the end of oil exceptions makes sense for the U.S. The circular included updates on why the U.S. is increasing oil production exports, the current global supply/demand oil markets, and why pressure from the Trump administration is working to alter Iran.

The IEA projects U.S. exports will rise sharply through 2021, and the U.S. will become the second largest oil and petroleum products exporter at around 9 million barrels per day, ahead of Russia and nearly equal to Saudi Arabia. The U.S. remains in close and productive consultations with major oil producers, as well as major oil consuming organizations such as the International Energy Agency, which works to assure the global oil market is well supplied.