U.S Ability to Offset Iran Oil Losses Has Some Built-In Limits
(Bloomberg) -- When the U.S. vowed to stop any sales of Iranian crude, Secretary of State Mike Pompeo trumpeted America’s ability to help offset supply losses. Maybe, but it would be a stretch.
It won’t be "like for like" replacement, said Sandy Fielden, an analyst at Morningstar Inc., by telephone. And "buyers may not be very confident."
Meanwhile, American refiners hard-pressed to replace lost supply from Venezuela, Mexico and Canada are lined up for the heavier, high-sulfur oil produced in the U.S. that would be the closest alternative to other types of heavy crude produced in Iran.
This week, the Trump administration said it won’t renew waivers that let countries buy Iranian oil without facing U.S. sanctions. Pompeo said the U.S., Saudi Arabia and the U.A.E. will work directly with Iran’s former customers to offset their losses.
If the U.S. pulls off its stated intent to push Iran oil sales to zero, the waivers could affect as much as 800,000 total barrels a day of supply.
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