Donald Trump could save the oil market
In the aftermath of Donald Trump’s win and his appointment as President-elect, experts are closely monitoring the global market trends
In the aftermath of Donald Trump’s win and his appointment as President-elect, experts are closely monitoring the global market trends. His plan consists of expanding the oil supply and rigs in the United States, which could challenge the oil prices that lost 50 percent of its value since mid-2014.
The OPEC mission is to restore balance to a difficult oil market, in light of the persistence of the top producers to get their full market share, along with a frenzied race to raise production to ensure the least concession possible. Trump’s win is making the task very difficult.
OPEC is struggling under the gloomiest global economic prospects, with Trump pursuing a policy of protectionism, as well as increasing the US oil production as he pledged to open all Federal land to the exploration for oil and gas.
The new president criticized the agreement between the West and Tehran. Trump is seeking to annul the agreement that was signed in early 2016 after long and arduous negotiations. If this happens, it could be the greatest melioration for the global oil markets, since it would absorb about one million barrels per day from the market, which would relieve the organization.
Upon Trump’s election, President Hassan Rouhani stated that Trump cannot declare invalid the nuclear agreement with Iran, given that the agreement cannot be canceled unilaterally.
However, Bloomberg Oil expert Julian Lee cited two probable possibilities of canceling the nuclear deal, which will have international consequences.
The first hypothesis is based on the fact that the former US president Barack Obama imposed the nuclear agreement under the ‘executive order’ after Congress refused to ratify it, this means that Trump could circumvent it and find a way to annul it.
The second hypothesis is based on the conditions of the agreement itself. If one of the parties is not satisfied, and believes that there has been a breach, he can refer the file to the UN Security Council, which will meet to vote on the ‘continuity of the lifting of sanctions on Tehran.’
Simply put, since the United States enjoys the right of veto as a member of the Security Council, there is a high probability that Trump will use this leverage to put sanctions on Iran.
The doors of Europe will remain somewhat open in front of Tehran, but according to Mr. Lee, this will not be effective. Despite the lifting of sanctions on Iran, Europeans companies remain shy in numbers.
OPEC will meet on the 30th of November to develop a preliminary agreement on the reduction of production. Nevertheless, Iran insists on reaching a production of 4 million barrels a day.
Sources have informed Reuters that OPEC proposed Iran with 3.92 million barrels per day, the source said that Tehran has not yet responded to the proposal.
*This article can also be viewed in Arabic on AlArabiya.net