Iranian crude and condensate production has averaged around 3.3 million b/d in recent months, as supplies remained 1.2 million b/d below the output seen before the US pulled out of the Joint Comprehensive Plan of Action in 2018, according to data from S&P Global Commodity Insights. China's hand in helping reestablish diplomatic relations between Iran and Saudi Arabia is a demonstration of that influence." Oil sanctions "Iran knows that it needs China's support more than China needs Iran's oil. The "greatest risk to the market would be a military conflict between Iran and the West, which could potentially threaten all exports through the Persian Gulf and Suez Canal."ĭespite current US discontent with China, Beijing may be aligned with Washington on this issue as a nuclear-armed Iran would "likely trigger a nuclear arms race in the Gulf and create instability, which would be harmful to the security of oil supply for China," Goldwyn said.Īlthough "the US cannot force China to renounce imports of Iranian oil, China has influence," he continued. "If exports were fully eliminated, prices could rise by $10-$15/b," he said. "Given the administration's redline of not allowing Iran to develop a nuclear weapon, the key risk to the market is whether Iran will breach that limit and, if so, what the western response will be," said David Goldwyn, chairperson of the Atlantic Council Global Energy Center's Energy Advisory Group. With Iran's crude and condensate exports topping 1 million b/d despite US sanctions, any disruption to those exports - either through tightened sanctions enforcement or factors that limit Iran's production and export capabilities - would have a bullish effect on the oil market.
US efforts to rein in Iran's nuclear program have moved out of the spotlight, but the administration of President Joe Biden continues to pursue a diplomatic solution in hopes of staving off geopolitical unrest and military conflict that would roil global oil markets and worsen the ongoing energy crisis.
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