It is expected that there will be oil output cuts at the beginning of next year – not just because of the U.S. sanctions on Iran but also because of the U.S. – China trade war that is going on.
Saudi Arabia is likely to be the most affected by the changes in the oil market but it will be able to react accordingly thanks to the establishment of a more flexible monitoring committee. The committee in Vienna with be run by Russia and it will provide recommendations so that Saudi Arabia can react appropriately to the market situation so that it does not have to wait until OPEC makes a unanimous ministerial decision.
Iran has been pushing for the two current monitoring committees to be scrapped, thus it will be in a worse position than before. Iran wants the monitoring committees to be scrapped because they are predominantly against the interests of Iran.
When the U.S. State Department announced that it expects all foreign countries to cut their imports of Iranian oil to zero, it was stated that absolutely no waivers would be granted. Then a short time later, it said that countries would be dealt with on an individual basis.
Then the Trump administration announced at the last-minute that a number of exemptions had been made – more than expected. This resulted in the expected loss of Iranian crude oil from the market being very wrong which only added to the oversupply.
The pressure on Iran, however, is having a major impact. The Iranian regime is trying to make out that the U.S. sanctions are not having any major consequences and several officials have spoken about how Iran will continue to trade oil despite the restrictions the U.S. is imposing.
However, this is not the reality. The Iranian regime is losing its grip on power. It was once a key player in the oil market as it is a major producer, but it is now being taken over by Venezuela and Nigeria.
Furthermore, it was once powerful in the sense that it was able to act as it pleases without any regard for international norms and without any fear of repercussions from the international community. This was especially true when former U.S. President Barack Obama was in office. Obama was so focused on getting Iran to sign a nuclear agreement that he basically let Iran get away with anything. He did not dare call Iran out on its belligerence for fear that it would not sign the nuclear deal.
However, times have changed and President Trump is trying to get Iran under control. It is the number one threat to peace and security in the region. And Trump is treating it as such.