With the second round of US sanctions in place it is clear the world has the resources and means to cope without Iranian oil. This has been reaffirmed by major oil producers who have been increasing their output for weeks anticipating a drop in global supply. Confidence is up despite Iranian oil going off the market. Those who predicted doom and gloom can hang their heads in shame. An uncertain economic climate was forecast when the Trump administration declared its intentions to pull out of the nuclear deal in May and reimpose sanctions but that didn’t happen because major oil producers like Saudi Arabia, the US and Russia have been boosting production.
Joint output of these three players rose above 33 million barrels per day for the first time in October. In the UAE, the Abu Dhabi National Oil Company has also announced plans to ramp up capacity to 5 million bpd by 2030, which will make it self-sufficient. Overall, for the 1 to 1.5 million bdp of Iranian shipments that are expected to be knocked out of the supply chain, 2.5 million bpd are expected to be added by 2019. This is good enough to meet rising demand and keep prices stable.
Tehran was emboldened after the nuclear treaty signed in 2015. Now as Trump tightens the noose, Europe and other western powers should join efforts to make these measures work. Prospects of peace in the Middle East hinge on the effectiveness of sanctions to rein in the regime. Iran must play by the rules if it is to have a seat at the table. It’s now or never for Tehran.