Kristian Rouz — Iranian Oil Minister Bijan Zanganeh says public comments from US officials have contributed to the recent swings in international oil prices, thus rendering the energy market a more unpredictable environment.
According to a report from the Iranian oil ministry's press agency SHANA on Saturday, Zanganeh criticised remarks made by several top US officials about oil prices, sanctions on certain oil-producing nations, as well as public calls on OPEC by the Trump administration to keep prices in check.
Although the minister didn't mention any names, his comments are believed to come in response to US President Donald Trump's use of Twitter to express his sentiment regarding the state of affairs in the global energy market.
"Americans talk a lot and I advise them to talk less. They have caused tensions in the oil market for over a year now and they are responsible for it, and if this trend continues, the market will be more tense," Zanganeh said, according to the SHANA report, as quoted by Reuters.
Trump has repeatedly called on OPEC to not let oil prices dramatically increase, as rising prices push up energy costs in the US. Although the US is currently producing roughly 12 mln bpd, according to the Energy Information Administration (EIA), its imports stand at 20 mln bpd — meaning the international oil cartel still has some impact on the North American energy market.
Trump has tweeted about oil prices twice in the past several months — in February and back in December, just ahead of OPEC's policy meeting in Vienna, where the oil cartel coordinated deeper output cuts to support prices.
Meanwhile, other US officials have recently made remarks that stirred the anticipation of higher oil prices among investors. For example, State Department Representative for Iran Brian Hook said last week that the global oil supply would exceed demand by 400,000 bpd this year — likely weighing on prices. In this light, Hook said, there is room for the US to revoke its waivers for buyers of Iranian oil — with an aim to bring the Islamic Republic's oil exports under 1 mln bpd.
"Last year, when we did our waivers, it was a tight and fragile market, but we were able to successfully balance our interests," Hook said. "There are projections that supply will exceed demand, but those are projections. But we will continue to balance our national security and our economic interests."
While oil prices remain fairly high — at $67.94/bbl of Brent benchmark in London — current macroeconomic conditions would suggest that prices should be much lower. Aside from the aforementioned oversupply projections, global economic growth is slowing, suggesting weaker demand for energy down the road.
However, US plans to levy sanctions against Venezuela's state-run oil company PDVSA and Iran have been supportive of elevated fuel costs.
So far, analysts believe oil prices could go even higher. In a recent report, experts from US investment bank Goldman Sachs said Brent oil could go above $70/bbl in the coming weeks — due to a combination of political risks and macroeconomic concerns.
"We continue to believe that ongoing macro and oil demand concerns are overdone," Goldman experts wrote. "Any further meaningful rally in oil prices will likely lead to further US pressure to ease. So far, however, the ongoing OPEC ‘shock and awe' strategy has shown no signs of wavering after the latest US presidential oil tweet. "
Zanganeh, for his part, also weighed in on the upcoming review of US waivers for Iran's oil buyers. The cabinet minister said Iran is still pursuing plans to update its oil tanker fleet, and expand oil production.
"We do not know whether US waivers would be extended or not, we will do our job, but they say something new every single day," Zanganeh said.
His remarks come amid rising US exports of crude oil, a significant portion of which, some experts believe, could go to China — if Washington and Beijing strike a trade accord over the coming weeks.
China is one of the biggest importers of Iranian oil, but its state-run energy giant, China National Petroleum Corp (CNPC), recently suspended investment into oil exploration and extraction in Iran, allegedly out of concerns regarding secondary US sanctions.
Zanganeh, howevr, said Tehran is still trying to convince China to continue bilateral energy cooperation.
"Negotiations are ongoing. A senior delegation from China is due to come to Iran for talks. They have promised to come to Iran soon," Zanganeh said.
If the US waiver for China-Iran oil trade is not extended in May, and Washington and Beijing reach a trade agreement before that date, market participants expect China to become one of the largest export markets for American energy.