Venezuela and Iran, two oil producers and subject to US sanctions, could benefit from the embargoes imposed on Russia by the war in Ukraine, experts estimate.
This is a unique opportunity for these two countries to recover markets in the West, estimates Edward Moya, from the Oanda brokerage company.
“It is convenient for them to take advantage of this moment of intensification of sanctions against energy from Russia” the new number one enemy of the West, comments the analyst, questioned by AFP.
France already advocated, during the G7 summit in Germany, for a “diversification of supplies” from Iran and Venezuela and thus stop the brutal rise in fuel prices caused by the war in Ukraine.
North Sea Brent, the benchmark for European crude, has risen 20% since the start of the invasion on February 24, while US WTI has gained 22%.
Among the factors causing this rise are the ban on importing Russian hydrocarbons, with a US embargo in March and similar measures adopted in early June by the European Union.
In this context, the 23 members of Opec+, who meet on Thursday to adjust their production, are under international pressure to increase their supply and guarantee a fair price for both consumers and producers.
At the beginning of June, they partially responded to expectations, although this time analysts are betting on a status quo despite numerous calls to put more crude on the market.
The United Arab Emirates claims to have reached the maximum of its possibilities, and Saudi Arabia remains in the reserve, according to French President Emmanuel Macron.
Experts see in Saudi Arabia’s reluctance the will not to bother its ally Russia, the other great pillar of Opec+.
Therefore, only Iran and Venezuela remain, currently subject to Washington sanctions.
Together, the two countries could bring “a substantial amount of oil to market fairly quickly,” says Oanda’s Craig Erlam.
Iran has a capacity of up to 4 million barrels a day and Venezuela could produce up to a million, according to Swissquote estimates.
“Tough times call for extreme measures,” stresses Stephen Innes of Spi Asset Management.
“Politicians show great creativity to curb prices,” he says, but “all the creativity in the world does not allow more barrels to reach a market that absolutely needs them,” he adds. Hence “the growing pressure on the White House, from European leaders, to change the course of its sanctions.”
On the Iranian side, everything will depend on the unpredictable negotiations on Tehran’s nuclear program, whose objective is to reintegrate the United States into the 2015 agreement and for the Islamic Republic to fully respect its commitments in exchange for a lifting of international sanctions.
After three months of blockade, talks have resumed in Qatar, indirectly, between Tehran and Washington.
Even without waiting for an agreement, “the United States could authorize the supply of Iranian barrels on the market,” says Innes.
On the side of Venezuela, a country that has the largest proven oil reserves in the world, the White House announced in mid-May that some of the sanctions imposed in 2019 were being eased.
Washington had severed diplomatic relations and imposed an oil embargo with the aim of removing Nicolas Maduro from power after the controversial 2018 elections.
The green light given to the Italian companies Eni and Spanish Repsol to export Venezuelan oil to Europe was hailed by Maduro as “light but significant measures.”
Sanctions against Caracas will continue to be eased in the event of democratic progress and “free” elections. Instead they will be toughened if the opposite happens, warned a senior US official.