TEHRAN – Iran managed to export at least 57 million barrels of crude during a brief gap between two American naval blockades, highlighting what’s at stake for the global oil market now that restrictions are being reimposed.
Trump said on July 13 that the US will restore its blockade of ships departing or entering Iranian ports and demanded a 20 per cent reimbursement on all other cargo moved through the Strait of Hormuz. His social media post came less than a month after an interim deal between Washington and Tehran to relax the restrictions and lift sanctions on sales.
In the period between the two cordons, Tehran was able to ship at least 2.2 million barrels a day, a very high level by recent standards. Actual flows could be higher still given that the country has a long track record of hiding cargo flows. The flows include shipments from its export installations and on carriers that had been blockaded at an Iranian port in the Gulf of Oman.
Large amounts of the oil that exited are being shipped in the direction of customers and could offer Iran an economic lifeline, and add to a wider gush of supply, if Tehran can find willing buyers for the barrels.
“We are reinstating the THE IRANIAN BLOCKADE, so named because it is only stopping Iran’s ships or customers from entering or leaving. All other countries will have fair and open use of the Strait,” Trump said July 13 on social media.
“The USA will be, from this point forward, known as “THE GUARDIAN OF THE HORMUZ STRAIT,” but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20 per cent on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World.”
The additional Iranian barrels had helped oil prices continue to cool in the first two weeks after the memorandum was signed. Brent futures, an international benchmark, were up 4.7 per cent at US$79.67 a barrel on July 13.
The initial blockade saw Kharg Island, Iran’s main export facility in the Persian Gulf, sitting empty for several weeks, and curtailments to the nation’s production. Bloomberg
