The war in Ukraine could be an opportunity for Venezuelan and Iranian finances

Venezuela and Iran, two oil producers and subject to US sanctions, could benefit from the embargoes imposed on Russia by the war in Ukraine, according to the analysis of several experts.

This is a unique opportunity for these two countries to recover Western markets, estimates Edward Moya of Oanda’s brokerage firm.

“It is better for them to take advantage of this moment of intensification of sanctions against energy from Russia” the new enemy number one of the West, comments the analyst, questioned by the AFP.

France has already advocated, during the G7 summit in Germany, a “diversification of supplies” from Iran and Venezuela and thus halt the brutal increase in fuel prices caused by the war in Ukraine.

Brent from the North Sea, a reference for crude oil in Europe, up 20% since the invasion began on February 24, while the US WTI rose 22%.

Among the factors that led to this increase are the import ban on Russian hydrocarbons, with the US embargo in March and similar measures adopted in early June by the European Union.

Pressure on producing countries

In this context, the 23 OPEC ++ members, who meet on Thursday to adjust their production, are under international pressure to increase their supply and ensure a fair price for both consumers and producers.

At the beginning of June they partially met expectations, although this time analysts are betting on a status quo despite the numerous calls for more crude to be placed on the market.

The UAE says it has reached the maximum of its possibilities and Saudi Arabia remains in the reserve, according to French President Emmanuel Macron.

Experts see Saudi Arabia’s reluctance not to disturb its ally Russia, the other great pillar of OPEC ++.

The enemies of America

Like this, only Iran and Venezuela remainfor the moment enemies of Washington and subject to sanctions.

Together, the two countries could bring “a significant amount of oil to market fairly quickly,” says Craig Erlam of Oanda.

Iran has a capacity of up to 4 million barrels per day and Venezuela could produce up to one million, according to Swissquote estimates.

“Difficult times call for extreme measures,” emphasizes Stephen Innes of Spi Asset Management.

“Politicians show great creativity to curb prices,” he says, but “all the creativity in the world does not allow more barrels to reach a market that badly needs it,” he adds.

Hence “the growing pressure on the White House by European leaders to change the course of its sanctions”.

On the Iranian side, everything will depend on the unpredictable negotiations on Tehran’s nuclear program, the aim of which is to reintegrate the United States into the 2015 agreement and that the Islamic Republic fully respects its commitments in exchange for the lifting of international sanctions.

the nuclear deal

After three months of blockade, talks have resumed indirectly in Qatar between Tehran and Washington.

Even without waiting for an agreement, “The United States could authorize the offer of Iranian barrels on the market, “says Innes.

On the side of Venezuela, the country that has the largest proven oil reserves in the world, the White House announced in mid-May that some of the sanctions imposed in 2019 would be eased.

Washington had cut off diplomatic relations and imposed an oil embargo with the aim of removing Nicolás Maduro from power following the controversial 2018 elections.

The green light given to the Italian Eni and the Spanish Repsol to export Venezuelan oil to Europe was welcomed by Maduro as “light but significant measures”

Sanctions against Caracas will continue to be relaxed in the event of democratic progress and “free” elections, according to Washington.

Instead they will be hardened if the opposite happens, a senior US official warned.

Source: AFP

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