The United States has completed the sale of over one million barrels of gasoline that were seized from four Iranian vessels last August. The fuel seized came from Iran while being transported to Venezuela, two countries sanctioned by the United States. In addition, the Biden Administration is also looking to detain another tanker believed to have shipped Iranian oil to a foreign customer. Sanctions on Iranian oil exports occurred in 2018 after the Trump Administration abandoned the Iranian nuclear agreement of 2015 due to Iran continuing to develop their nuclear program.
Venezuela has been suffering from a fuel shortage due to sanctions imposed by the U.S government. Iran and Venezuela are targets of United States sanctions and therefore Iran has stated its willingness to aid Venezuela as a fellow target of U.S sanctions. In August, the United States seized the cargo of four ships carrying fuel from Iran to Venezuela. Throughout this year, five Iranian vessels were set to aid in Venezuela’s shortage and earlier this year, only one of the five made it to Venezuela with the much-needed cargo. The other four never made it and the cargo of these vessels was seized by the U.S Administration, the cargo totaled 1.116 million barrels of petroleum.
The country of Venezuela has battled through tumultuous times under United States sanctions, a poor refining network has caused gasoline shortages as well as political and social upheaval. Another country that has also been under similar scrutiny and sanctions from the United States for comparison is Iran. Over the past month, Iran has sent dozens of plane loads to Venezuela, consisting of equipment and chemicals necessary to produce gasoline as well as technicians to help jumpstart the dilapidated refineries of the South American country. In addition, five Iranian tankers are currently in route to Venezuela to help improve the growing shortage of gasoline that as of last month had consumers paying close to $8 per gallon.
On Monday, Venezuelan President Nicholas Maduro appointed his economy vice president, Tareck El Aissami as his new oil minister. El Aissami’s appointment comes at a time where the country has been dealing with hyperinflation, declining oil production, shortages on basic goods and sanctions from the United States. As if things could not get any more precarious for the OPEC nation, El Aissami was recently added to the list of America’s Ten Most Wanted Fugitives on charges of drug trafficking.
The Trump administration is not expected to grant the Chevon Corporation another waiver to operate in Venezuela as the United States begins planning to increase pressure through sanctions on the regime run by Nicolas Maduro. The most recent waiver granted to Chevron is the fourth instance that has allowed Chevron to operate in the South American country since sanctions commenced in 2018. The waiver is set to expire on April 22.
Last week, Iraq announced that they are holding a fifth bidding round for exploration and development of natural gas fields in the province of Diyala. Located in eastern Iraq, the fields of Diyala are expected to produce more than 750 million cubic feet of natural gas within the next three years. This latest round of bidding for the country’s underdeveloped fields comes at a time where the United States has pressured the country to reduce its dependence on gas imports from Iran.
President Trump recently threatened to tax, nearly $300 billion dollars of Chinese products, by 10%. The already volatile oil market, seems to have room for some extra volatility. The volatility would largely cycle around China’s response to the U.S. tariffs. If China responds by purchasing oil from Iran, analysts speculate crude could rapidly approach $30 per barrel. Trump could impose the sanctions on the Chinese imports as soon as September 1st. Trump also threatened that he could raise the tariff, if no progress has been made towards a trade deal.
According to reports, Iran is quickly going to breach the Uranium-stockpile limit set by the current nuclear deal. President Hassan Rouhani of Iran has already warned that a new deal needed to be in action by Sunday June 7, 2019 or the Islamic Republic will increase enrichment of Uranium. Globally, there is much concern with the growth rate of Iran’s uranium cache, because they are just a step away from weapon-grade levels of uranium.
Early this morning the U.S. navy responded to an attack on two burning tankers after reports came that there was an attack in the Gulf of Oman. Off the coast in Iran, the USS Bainbridge was dispatched after the vessels suffered severe damage.
On May 2nd, the United States’ waiver period that granted eight nations to continue importing Iranian oil without penalty has ended. The countries who granted extensions that ended are China, India, Turkey, Greece, Italy, Japan, South Korea and Taiwan. As of today, only Italy, Taiwan and Greece have halted their purchases of Iranian produced oil. The United States now faces the dilemma of either granting further extensions to the waiver thus backing down from their threats, or risk creating further global tension by sanctioning the countries that continue to do business with Iran.