US to Release 11 Million Barrels of Oil to Market Before Second Round of Iran Sanctions

On the eve of the implementation of Iran sanctions by Washington in November of this year, the US Department of Energy will release 11 million barrels of oil from its strategic reserves for sale. According to the US Department of Energy's announcement, the sale of these shipments will take place from October 1 to November 30. On November 4, coinciding with Aban 13, US oil sanctions against Iran will be enforced. In this regard, Reuters reported on Tuesday, August 30, that the Trump administration intends to prevent an increase in oil prices in the markets at the start of Iran's sanctions. Additionally, mid-November this year will see the US midterm elections, and the Trump administration does not want to provoke American voters' dissatisfaction with rising gasoline prices. The midterm elections will determine the fate of 435 seats in the House of Representatives and 35 seats in the 100-seat Senate. Currently, global oil prices are low due to a decline in oil demand growth. According to the International Energy Agency, global oil demand in the first and fourth quarters of this year will be 1.8 million barrels, and in the second and third quarters, only one million barrels per day. Thus, it is expected that despite low oil prices this summer, prices will rise in the fall due to increased demand. Reuters quoted experts stating that temporarily, oil prices are low due to seasonal demand decreases. The US Department of Energy recently also put 5.2 million barrels from its strategic reserves up for sale, which is set to hit the market within a week. Bloomberg reported in late July that the US plans to test the market with about five million barrels from its strategic reserves and if prices do not drop, this figure could increase to 30 million barrels. The sale of these shipments will also help offset the US budget deficit. Hossein Kazempour Ardebili, Iran's representative at the Organization of the Petroleum Exporting Countries (OPEC), told Bloomberg on July 26, 'Mr. President (Donald Trump), my advice to you is to refrain from tapping into US strategic reserves to lower oil prices and to lift sanctions on Iran.' The US announced at the beginning of its withdrawal from the JCPOA in May that it intends to bring Iran's crude oil exports to zero. However, it later stated that it would pressure Iran's customers to significantly reduce or cease their purchases of Iranian oil. Iran exports 2.1 million barrels of crude oil and about 250,000 barrels of gas condensate daily. According to the latest report from the US Energy Information Administration, the amount of US strategic oil reserves as of August 10 this year was just over 414 million barrels, which is one percent higher than the average US strategic reserves over the past five years. US daily oil production is expected to increase by 1.3 million barrels this year to reach 10.7 million barrels, and next year it is projected to peak at 11.7 million barrels with a one million barrel increase.