The U.S. proposed a sale offer of 11 million barrels of oil taken from the nation’s Strategic Petroleum Reserve (SPR). This action was taken as a counteroffer to cover for supply loss coming from implied sanctions on Iran. The Iranian problem remains a question mark, because effect has not taken place yet, but again time is running out. The proposed sale of crude oil was given a starting date on October the 1st and will be ending November the 30th, which is the winding down period end, the US has given to countries using Iran as a source of glut to change supplier or face the consequences . On the other hand, this US move exemplifies its intentions to drop crude prices but also to forward its supply to the world. US shale oil producers have been picking up major productivity this year adding active rigs. It could be also a signal that the US holds an excess output in hand with over 100 active rigs added in 2018.
Europe, has openly opposed the aggressive US stance towards Iran, and is in favor of saving the 2015 nuclear deal. Especially, Germany has made it clear that its economic interests benefit from continuing to do business with Persia. Through German Foreign Minister Heiko Maas, it was supported that Europe may need to create a separate payment system of the United States by strengthening the autonomy of a European payment system. European major countries have been intensifying efforts to safeguard business with Iran and to ensure Persia gets enough economic benefits in order to convince them to stay in the deal. To be honest, with many European firms aware of the US sanctions blackmailing their interests, the situation could remain fogged as to the outcome of the following months. However, with the Europeans trying to find a solution, Iran was seen reaching out to Europe in an attempt to add pressure to rescue the nuclear accord. Lately, French oil group Total formally withdrew from a major energy venture. The biggest issue arising from the situation is who will cover for Iran’s share of Oil supply.
On another front, from the Middle East, southern Iraq Oil exports boosted up to reach another record high this month, indicating it is following through on OPEC’s agreement to raise output. It must be noted that Iraq is currently OPEC’s second-largest producer and its moves represent greatly the group’s future plans. Up to date and in August, Southern Iraqi exports move up to 3.7 million barrels per day, according to ship-tracking data, adding 160,000 bpd from July’s 3.54 million bpd. On the contrary, OPEC’s Saudi Arabia did not increase its share of supply, as the news stated previously which made Oil prices advance somewhat.
Furthermore, according to Reuters, Kuwait Oil Minister, stated that the OPEC and non-OPEC production will be appraised at the Algeria meeting programmed for the 24th of September.
In addition, many events in the Oil industry are planned to take place within fall 2018, which could be an alarm ringing for further volatility in the market. As issues add up we see the case for the commodity’s prices to rise, as it reacts greatly to instability and worries geopolitically and supply wise.