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    Iranian oil technician checks the oil separator facilities in Azadegan oil field, near Ahvaz, Iran (File)

    US Sanctions to Have Virtually No Impact on Iranian Oil Industry – Oil Economist

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    US Withdraws From Iran Nuclear Deal (33)

    Global oil prices are on the rise as French oil giant Total is warning of scrapping its 40-million-euro gas project in Iran due to looming US sanctions. Total stressed that it would be highly vulnerable, since it has 10 billion dollars invested in US assets. Sputnik discussed the issue with Dr. Mamdouh Salameh, an international oil economist.

    Sputnik: French oil major Total stated that it will end its work on a major gas field project in Iran unless it is exempt from US sanctions against Tehran. Were you personally surprised by the announcement?

    Mamdouh Salameh: The fear of Total made indicate it may seek waiver from the US Treasury. However, the prospect that the US government will grant a weaver to Total is nil, having rejected twice a request for a weaver by Exxon Mobil for its investment in the Russian Arctic. Total's business in the US is bigger than any would-be business with Iran, hence Total's stance.

    READ MORE: Global Oil Prices on the Rise as France's Total Warns to Scrap Its Iran Project

    Sputnik: Meanwhile French President Emmanuel Macron has stated that the EU intends to ensure the presence of its companies in Iran, despite the US withdrawal from the deal. How likely is the block to succeed given the pressure from Washington?

    Mamdouh Salameh: The European Union has a lot of economic muscle. We must remember that the EU is the biggest economic block in the world, accounting for 23% of the global economy, compared with the 18% for the US. The EU stated that it will not walk away from the Iran nuclear deal and therefore will not comply with the US sanctions. If the US starts to penalize European companies doing business in Iran, the EU will retaliate, targeting top US companies doing business in Europe, including Boeing.

    READ MORE: EU to Switch From Dollar to Euro in Payments for Iranian Oil Supplies — Source

    Sputnik: Do you think more companies would follow Total's lead and deciding to actually to remove themselves from trading and doing business and operations in Iran?

    Mamdouh Salameh: It is possible. Some European companies may follow Total's lead, but only if their interests in the US market are bigger than those with Iran. Very few European companies have huge business in the US, very few indeed.

    Sputnik: What would this all mean for the Iranian gas and oil industry? How can it influence Tehran's plans to start selling its own crude oil now?

    Mamdouh Salameh: US sanctions will have virtually no impact on the Iranian oil industry or production, or exports and I'll explain to you why. Contrary to analysts' and banks' projections, Iran will not lose a single barrel of oil exports. More than 75% of Iran's oil exports go to China and the Asia Pacific region, while the remaining 25% go mostly to the EU. China, India and other Asia Pacific region countries, as well as the EU, are not going to comply with the US sanctions and reduce their imports of Iranian crude [oil].

    READ MORE: Will Saudi Arabia Fill Iranian Oil Gap After US Withdrawal From JCPOA?

    Most major buyers of Iranian crude [oil] will continue to do so, Japan and South Korea might decide to comply with the US sanctions and shun Iranian crude [oil]. However, this will be more than offset by increased imports of Iranian oil by China, India and other Asia Pacific countries, as well as the EU. Furthermore, Iran will be paid by the Petro Yuan for its exports to China and by Euro for its exports to the EU and also by barter trade for its dealings with India and Russia.

    The views and opinions expressed are those of the speaker and do not necessarily reflect those of Sputnik.

    US Withdraws From Iran Nuclear Deal (33)


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    sanctions, Iran nuclear deal, Joint Comprehensive Plan of Action (JCPOA), Total, United States, European Union, Iran
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