Energy Report: What Sanctions?

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Iran and China are opening, taunting the Biden administration as it openly flaunts oil sanctions on Iran even as Iran raises its enrichment of uranium. Both China and Iran seem to think that the Biden administration will be too weak to call them out on these flagrant violations of U.S. sanctions. Under President Trump, they were not as bold. China did try to sneak in Iranian oil but was called out by the Trump administration and that slowed and stopped almost all of China’s illicit oil imports. Yet China and Iran think that now it is business as usual because there will be no consequences from the Biden administration that is begging Iran to rejoin the flawed Iranian nuclear deal. The money Iran is getting is also empowering them to continue its military excursions in the Middle East and raising the risks of a conflict with Israel and Saudi Arabia.

Bloomberg News reported that “China is gorging on sanctioned Iranian oil -- with imports forecast to more than double this month from February -- as other countries hold off purchases for fear of incurring the wrath of the U.S.” So what they are saying is that Iran and China are not worried about the Biden administration's wrath. Chinese imports of Iranian crude will increase to 856,000 barrels a day in March, the most in almost two years and up 129% from last month, according to Kevin Wright, a Singapore-based analyst with Kpler. His estimates include oil that’s undergone ship-to-ship transfers in the Middle East or waters off Singapore, Malaysia, and Indonesia to obscure their origin.”

Israel is signaling that if Iran does not reverse their nuclear ambitions they may be forced to act militarily and over the weekend Saudi Arabia was attacked by an Iranian-backed Houthi rebel that made a failed drone attack on a Saudi oil terminal, the largest in the world. Iran seems to be getting out of the corner that the Trump administration put them in. This is adding to the risk premium for oil. All oil traders know that the higher price for oil, the higher price for products. Oil economics 101. 

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