Page 5 - LatAmOil Week 22

LatAmOil COMMENTARY LatAmOil

“For several weeks now, the Americans have the introduction of new sanctions on Venezuela
been threatening Iran in various ways ... But and the national oil company (NOC) PdVSA in
with the successful arrival of Iranian tankers, the early 2019. Moreover, Maduro’s time in power
famous saying by [Iranian revolutionary leader has been marked by the collapse of the country’s
Ayatollah Ruhollah] Khomeini that ‘America economy.
can’t do a damn thing’ took on real meaning,” Even so, the president remains in power, “
he remarked. resisting calls that he step down in favour of Abrams has
Izadi further contended that other nations opposition leader Juan Guaido.
would take note of the “success” of Tehran’s pol- The sanctions regime is designed to put pres- predicted that
icy vis-à-vis the US, leading to the crumbling of sure on Maduro, and Washington has hinted the Iranian fuel
US sanctions. that it is willing to adopt additional measures
Etemad, a reformist Iranian daily, also hailed to promote regime change. President Donald supplies will only
the gasoline deliveries. “Sanctioned countries Trump said after the Iranian ships departed for
have started to fight back against bullying on the Venezuela that his administration was consider- last a few weeks
international scene,” it wrote. ing options for a “response.”
By contrast, US Assistant Secretary of State Subsequently, the US Navy beefed up its and will mostly
for Near Eastern affairs David Schenker said on presence in the Caribbean in a bid to discour- be siphoned
May 27 that Washington was “not pleased” with age the tanker flotilla from moving ahead with
the shipments and was looking at its options. deliveries. Iran appears to have called this bluff, off by Maduro
“These are two pariah states that have hor- however.
rific human rights abuses,” Schenker said during “Tehran is signalling that despite Washing- loyalists
an online event organised by the Beirut Insti- ton’s [sanctions-led] campaign of ‘maximum
tute. “One could imagine them sending other pressure,’ it will not only continue to help its
things—I mean weapons, who knows?” allies but it also has the ability to do so,” Sanam
Vakil, the deputy director of the Middle East and
Unpredictable responses North Africa programme at Chatham House in
So far, it is not clear what effect Washington’s London, told RFE/RL last week.
efforts might have. “Moreover, brazenly sailing into waters so
Nevertheless, Abrams remained confident close to the US is intentionally provocative,” he
that the threat of sanctions would act as a deter- added.
rent. “I do not think that you will find ship own- Venezuelan officials have also hinted that
ers and insurers and captains and crews willing they are ready to take action against the US
to engage in these transactions in the future,” on the international stage. Venezuela’s Foreign
he said. He also predicted that the Iranian fuel Minister Jorge Arreaza said his government
supplies would only last a few weeks and would would use Abrams’ recent comments as evi-
mostly be siphoned off by Maduro loyalists. dence if it filed a lawsuit against sanctions in
Gasoline shortages have grown acute since international courts. ™

OPEC, allies to review output cuts

As the oil price rally stalls, OPEC+ considers extending production curbs by one to three months

OPEC+ and its allies will decide as soon as this Bank of America, US imports of Saudi crude
week whether or not to extend their historic have surged, inflating inventories.
WHAT: output cuts. How long and to what extent global It seems that US stockpiles are heading
Members of the OPEC+ production curtailments remain in place will be higher, at least in the short term as more imports
group will meet to crucial to sustaining crude’s rally after a record come in; at present the market is oversupplied
discuss an extension of rebound last month. and everyone is looking for more signs of
production cuts The Organization of Petroleum Exporting demand firming up.
Countries and its allies are expected to bring
WHY: their next meeting forward to Thursday June Market response
The present agreement 4 to discuss prolonging the present production So far, the production curbs have been effec-
extends through May and curbs by one to three months, according to a tive. The price of crude rallied by almost 90%
June. delegate. The existing agreement calls for eas- last month, a record gain, as shrinking supplies
ing cuts from July, a plan Russia would prefer helped to offset pandemic-related demand
WHAT NEXT: to stick to. losses. Yet the rally depends on producers main-
The market is watching Meanwhile in the US, the oil-drilling fleet taining cuts until the crude surplus that has
to see which way the dice shrank for the 11th week to a level not seen poured into the world’s storage tanks is mopped
will roll. since before the shale revolution. While North up. Higher prices could tempt producers to turn
American shut-ins have peaked, according to the taps back on, undercutting gains.

Week 22 04•June•2020 www. NEWSBASE .com P5