Brian Hook: Sanctions Have Reduced Iran's Oil Revenues by $10 Billion

The U.S. Special Representative for Iran, Brian Hook, stated that sanctions have so far reduced Iran's oil revenues by $10 billion. On Wednesday, March 13, at the 'CERAWeek' energy conference in Houston, Texas, he announced that the global oil surplus helps the U.S. accelerate its plan to bring Iran's oil exports to zero. The significant drop in oil production in Iran and Venezuela due to U.S. sanctions, combined with OPEC and allied countries' plans to cut production by 1.2 million barrels in mid-2019, has led to oil prices reaching $67.24, the highest in four months. The U.S. withdrew from the JCPOA on May 8 and implemented oil sanctions against Iran in November. Only eight countries are allowed to continue limited purchases of Iranian oil until May next year, and it is still unclear what the U.S. plans are for extending exemptions. Hook stated that since 2017, sanctions have resulted in a loss of $10 billion in Iranian oil revenues, and currently, Iran's daily oil exports have decreased by about 1.5 million barrels compared to 2017. According to the U.S. Energy Information Administration, the Brent crude oil price, which is several dollars higher than Iranian oil, is expected to average $63 in 2019. Continuing the daily decline of 1.5 million barrels in Iranian oil exports until the end of this year would mean a loss of nearly $33 billion in oil revenues for Tehran. The U.S. claims it wants to reduce Iran's exports even further, ultimately to zero. Hook mentioned that President Donald Trump has explicitly stated that the U.S. needs a campaign to exert maximum economic pressure on the Islamic Republic, but he has also emphasized that he does not want the oil market to become volatile and seeks to maintain stability in international markets. This U.S. official, who is a special advisor to Secretary of State Mike Pompeo on Iran, added that according to the U.S. Energy Information Administration, the oil surplus in global markets this year will be 400,000 barrels per day. In simple terms, daily oil production will be 400,000 barrels more than global oil consumption. Hook stated that when oil is well-supplied in the market, the U.S. has the ability to accelerate the complete cessation of Iranian oil. On the other hand, the U.S. has also implemented oil sanctions against Venezuela, and recent power outages have disrupted the loading operations of this country, leading to a significant drop in Venezuelan oil exports. Hook mentioned that over the past year, he has met several times with Khalid al-Falih, the Saudi oil minister, and the issue of increasing 'extensive' oil production (to compensate for the drop in Iranian and Venezuelan production) is under consideration to ensure that the sanctions actions initiated by the U.S. proceed 'in a correct and responsible manner.' Al-Falih recently stated that the OPEC and allied countries' plan led by Russia to cut oil production will likely continue only until June (one month after the expiration of U.S. exemptions for Iranian oil customers). If these countries' production cut plans do not continue, production in the mentioned countries will increase by 1.2 million barrels. Saudi Arabia alone has reduced its daily oil production by 800,000 barrels in recent months to increase oil prices and can easily raise its production back to that level.