Donald Trump: Global Production is Sufficient to Compensate for Iran's Oil Export Decline

The President of the United States has stated in a memo to the State, Energy, and Treasury Departments that global oil production is sufficient to replace the "significant reduction" in oil purchases from Iran's customers. According to the letter published on Monday, May 13, on the White House website, Donald Trump mentions that the latest statistics from the U.S. Energy Information Administration for April, along with other factors such as global economic conditions, increased oil production in certain countries, available capacity for increasing global oil production, and strategic oil reserves indicate that other countries can compensate for the significant decline in Iran's oil exports. In this context, Reuters has also reported that the White House letter paves the way for reducing Iran's oil exports. The report adds that the Trump administration has not yet decided how much to force Iran's oil customers to reduce their purchases, but during the sanctions imposed in 2012, customers were asked to reduce imports from Iran by 18 to 20 percent every six months. On May 8, the President officially announced that the United States would withdraw from the nuclear agreement with Iran and reinstate the suspended sanctions against Tehran. The new sanctions are set to take effect on November 4 of this year. Under the 2011 U.S. sanctions law, the U.S. Energy Information Administration, along with independent statistical agencies of the U.S. Department of Energy, must report to Congress on global oil production every two months. The latest statistics from the U.S. Energy Information Administration show that in recent months, global oil production, excluding Iran, has been about 92.4 million barrels per day, while from 2015 to 2017, this figure was 91 million barrels. Meanwhile, while global oil consumption from 2015 to 2017 was 93 million barrels per day, this figure has now risen to 96.4 million barrels, which has significantly reduced global strategic oil reserves. OPEC and some other oil-producing countries led by Russia have reduced their daily production by 1.8 million barrels per day since the beginning of 2017. This has not only controlled excess oil production in the market but has also reduced global strategic oil reserves to less than the levels of the past five years, causing oil prices to rise again to about $78, compared to prices below $30 in early 2016. In this context, OPEC has assessed the daily oil production of its members last month at 31.93 million barrels. This amount not only shows OPEC's full compliance with production cuts but is also more than 50% higher than what OPEC had committed to reduce (1.2 million barrels per day). The reason for this is the significant decline in oil exports from Venezuela, one of the members of this organization, which is grappling with debilitating financial crises. Venezuela's daily oil production last month fell by about 50% compared to 2016, dropping to 1.43 million barrels. Venezuela's oil production continues to decline each month due to its inability to repay debts to oil companies and their withdrawal. The decline in OPEC's oil production to below 32 million barrels comes at a time when, according to OPEC's own assessment, the demand for oil from this organization this year is about 770,000 barrels per day more than the current production of its members. Iran's daily oil production last month was 3.823 million barrels, which is 33,000 barrels more than the amount Iran committed to produce under the OPEC agreement. Iran has produced more oil than the agreed amount in the past and this year. OPEC states that this year, oil production from non-OPEC countries will increase by 1.72 million barrels per day, most of which is expected to occur in U.S. oil production.