July 10 (UPI) — Iranian threats to block the flow of oil through the Strait of Hormuz, a global chokepoint, haven’t been manifested yet, an international affairs expert said.
Facing a November deadline on U.S. sanctions on its oil sector, Iranian President Hassan Rouhani said last week it was unfortunate that unilateral pressures would isolate a single major exporter. With U.S. President Donald Trump calling on Saudi Arabia to pump out more oil, Rouhani said he could impede the flow of oil through the key strait.
If Iran can’t export its own oil through the strait, no other country should be able to either, the Iranian president said.
Heinz Gartner, a former director of the Austrian Institute for International Affairs, told the official Kuwait News Agency, or KUNA, that Iranian threats haven’t impacted the market yet. By his read, the international commitments to move oil through the Straits of Hormuz are still in place and there’s a “continued balance between the movements of supply and demand.”
The amount of oil flowing through the Strait of Hormuz represents about 20 percent of total global exports.
The looming loss of Iranian oil from the market has added to concerns about the lack of spare capacity on the market. Members of the Organization of Petroleum Exporting Countries in late June decided to ease compliance with an agreement to control production in order to offset supply-side concerns, though the implied increase in oil output might not be enough to offset expected shortages.
Gartner said OPEC ministers would consider the U.S. president’s request, which at 2 million barrels per day would represent all of Saudi Arabia’s spare capacity, when ministers meet next in September.
Iranian oil production slipped slightly in June to 3.8 million barrels per day, though it remains the third-largest producer in OPEC behind Iraq and Saudi Arabia. According to estimates from commodity pricing group S&P Global Platts, U.S. sanctions that go into place in November could sideline more than 1 million bpd of Iranian oil.