Saudi Arabia set to pursue nuclear weapons if Iran restarts program

Ann Santiago
May 10, 2018

But a drop in Iranian exports due to a return of US sanctions, plus involuntary supply losses in other OPEC members such as Venezuela, would mean the supply cut would be significantly larger than intended.

Assuming the USA sanctions are effective in curbing Iran's crude exports, Saudi Arabia and its OPEC allies will have to raise their production to make up the shortfall, or risk being blamed for a further rise in motoring costs.

According to President Trump's announcement yesterday, the United States will now reimpose stringent sanctions on Iran and is considering new penalties. The South Asian nation's imports from Saudi Arabia were up 1.9% to about 811,000 bpd, but the big mover was imports from Iraq, up a massive 45% to 1.13-million bpd.

"Iran's exports of oil to Asia and Europe will nearly certainly decline later this year and into 2019 as some nations seek alternatives in order to avoid trouble with Washington and as sanctions start to bite".

USA crude settled down $1.67 at $69.06 per barrel and Brent settled down $1.32 at $74.85.

"People should not take it for granted that Saudi Arabia will produce more oil single-handedly".

The existence of an understanding was confirmed by the U.S. Treasury Secretary who told reporters on Tuesday that "we have had conversations with various parties. that would be willing to increase oil supply". That raised worries of a quick rise in oil prices.

Noting tighter oil market conditions in recent months, the Paris-based agency - whose mandate is to safeguard global energy security - said it was monitoring the market situation.

The Organisation of the Petroleum Exporting Countries is in the midst of an oil supply-cutting deal with non-OPEC producers such as Russian Federation that has helped erase a global glut and boosted oil prices above $75, the highest since 2014.

Iran, itself a victim of weapons of mass destruction, says it has had no nuclear weapons program and is not in pursuit of such arms.

OPEC up coming matches to examine output policy in Vienna. In March, Saudi Arabia's Crown Prince Mohammed bin Salman branded Iran's Supreme Leader Ayatollah Ali Khamenei as the "new Hitler".

In response, Saudi Arabia quickly sought to try and offset any prospective slump in production levels being a result of the looming sanctions.

In theory, USA sanctions on Iran's oil industry will not be re-imposed for six months to give customers, traders and banks time to wind down their relationships in an orderly fashion. "We have made it very clear, if Iran acquires nuclear capability, we will do everything we can to do the same". Iran denies arming them. The least likely outcome is that Asian countries co-operate fully with the USA in its renewed conflict with Iran.

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