The recent tensions between Israel and Iran have sparked heated discussions, but surprisingly, it has had little impact on the oil market. Despite Iran’s increased exports, tensions escalated after Iran’s attack on Israel last weekend, followed by a retaliatory action from Israel. However, oil prices remained stable, with North Sea Brent oil seeing minimal fluctuations. Market analysts believe that all parties involved are not interested in prolonging the conflict and that the attacks are primarily to avoid appearing weak.
Iran’s ability to bypass sanctions and increase exports is attributed to advancements in their fleet of oil tankers. The expansion of their tanker fleet and utilization of creative methods to circumvent sanctions have allowed Iran to boost its oil exports. While the discussion around imposing stricter sanctions continues, targeting Chinese financial institutions poses risks to the delicate US-China relationship.
The increase in floating oil storage indicates Iran’s capability to meet demand, especially in China, despite geographical limitations. With Iranian oil prices likely lower than the world market price due to its quality and constraints, the discussion around sanctions and their effectiveness remains ongoing. Despite political risk in the region being factored into rising oil prices seen in recent weeks and months, Iran’s exports of crude oil and condensates have increased significantly despite US sanctions. The absence of the word “oil” in new US and EU sanctions against Iran indicates a focus on limiting revenue without major disruptions in oil supply.