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Iran is in a tight spot. The U.S. pulled out of the Iran nuclear deal, its currency has fallen about 50% since and locals are protesting as they lose purchasing power. Now throw in Trump's call to send oil exports to zero and have Saudi Arabia fill the gap. What to do, go private? 

To counter the sanctions Reuters reports Iran will allow private companies to export crude oil. This comes after U.S. President Trump and the King of Saudi Arabia agreed that the Kingdom would pump up to 2 million bpd to counter supply shocks and high prices. President Trump then followed up on the FOX morning show the next day to the downside of the Iran deal is oil. He said it is in the Arabian countries interest, they have to pump more oil as Iran is their enemy. 

Trump's reassertion of the nead for KSA and others to produce more came after Iran affectively pleaded with regional rival Saudi Arabia not to break output agreements. Iranian Oil Minister Bijan Zanganeh sent a letter to OPEC asking its members to stick to the group’s agreement reached just over a week ago last month and “refrain from any unilateral measures” that could undermine the unity of the producer group.

“Any increase in the production by any member country beyond commitments stipulated in OPEC’s decisions ... would constitute breach of the agreement,” Zanganeh wrote in his letter, seen by Reuters and also reported by state media on Sunday. 

One could argue Trump got the resposne he was looking for from Iranian leadership. Iran has never got away from its aggressive rhetoric is this banal threat to Saudi Arabia shows.

Jahangiri said: “Anyone trying to take away Iran’s oil market (share) would be committing great treachery against Iran and will one day pay for it.”

Iran is looking at ways to keep exporting oil as well as other measures to counter sanctions after the United States told allies to cut all imports of Iranian oil from November.

“Iranian crude oil will be offered on the bourse and the private sector can export it in a transparent way,” First Vice President Eshaq Jahangiri told an economic event in Tehran broadcast live on state television.

He added referring to Iran's oil and petrochemicals bourse, which is part of its mercantile exchange. 

"We want to defeat America’s efforts ... to stop Iran’s oil exports. Oil is already being offered on the bourse, about 60,000 barrels per day, but that has been only for exports of oil products,”.

 

Iran has enjoyed the benefits of being back in the 'legal' oil business. Iranian crude exports to China rose to the highest levels since sanctions. Iran crude and condensate exports to China continued to grow. Now Iran finds itself potentially as a pawn in the China-U.S. trade war and potentially the end of OPEC. Iran has benefited from the Russian and OPEC cuts and supply problems in Venezuela.  Iran was exempted from the OPEC production cut deal. 

South Korea in August last year passed India as the second-biggest buyer of Iranian crude for the first time since January 2016. Taiwan and Japan are the other Asian buyers. Exports to the Middle East, nearly all to the UAE, stays around 111,000 bpd. The main European buyers are Turkey wand Italy.

Iran has been aggressive since sanctions to increase market share, they will remain aggressive in trying to maintain their oil revenue as the country appaears to be impoding from the collapse of it's currency. The choice appears to come to the negotiating table with the U.S. or continue to walk the dangerous line it is on. 

From what we see is Iran is the weak hand in a game of cards with the U.S., China, Russia and Saudi Arabia. 

Source: Reuters

From the TradersCommunity Research Desk

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