Goldman Sees Oil Exports Giving U.S. Leverage in Iran Sanctions

(Bloomberg) -- The U.S. has a new bargaining chip on the table when it comes to Iranian sanctions: Shale.

In 2012, American oil stayed at home, giving the U.S. less leverage to compel powerhouse oil-consuming countries like India and China to sanction Iran. That was then, this is now. The crude export ban has been lifted, and “the U.S. is as large of an exporter as Iran -- 2.5 million barrels a day,” Jeff Currie, Goldman Sachs Group Inc’s global head of commodities, said Thursday in an interview with Bloomberg TV.

“That now gives them a bargaining chip -- saying -- ‘Hey, if you don’t comply, we can take away those barrels,’” he said. “It is a way to enforce compliance on refiners around the world.”

Sanctions on Iran will reduce the Islamic Republic’s ability to produce and export, but the lost oil supply will be supplanted by allies of the U.S., like Saudi Arabia, Currie said. While there is “a lot of geopolitical stuff going on,” the current oil rally is underpinned by real demand, not the headlines, he said.

As Iran’s Oil Minister Bijan Namdar Zanganeh sees his global market shrinking before his eyes, he said on state TV today that U.S. President Donald Trump’s motives are just “shenanigans” to raise prices for the shale producers.

“Nothing noteworthy will happen to our export of crude and condensate by the U.S. withdrawal,” Zanganeh said.

©2018 Bloomberg L.P.

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