The oil market is being manipulated through a series of announcements that seem to promise action but ultimately deliver little. This week, we saw a dizzying number of headlines claiming that Gulf energy is now a target of the war, with countries hoarding energy reserves in self-preservation mode.
The reality is that trade can be tracked and analyzed, revealing the true intentions behind these announcements. The latest Trump Administration measures to lower the price of oil are just headlines, not real solutions, according to energy experts. The Iranian sanctions are seen as a messaging exercise, designed to claim action rather than deliver it.
Daniel Tannenbaum, partner and global anti-financial crime practice leader at Oliver Wyman, explains that prices did not really decrease when Russian sanctions were waived, and barrels of the once-illicit oil became available. This suggests that the measures are more about messaging than actual change.
The impact of these announcements is further limited by the fact that both Russian and Iranian crude oil already have buyers accounted for. The European Union has yet to lift sanctions on Russian oil imposed in 2022 and on Iranian oil imposed in 2012, which means that even if the sanctions are temporarily lifted, the market will not be significantly affected.
Legal experts point out that even though the once-sanctioned oil is now temporarily allowed to move legally on the open market, it does not mean that insurers like Lloyds of London and Marsh would be willing to insure these ageing vessels, or banks would be willing to facilitate the transactions. The lack of insurance and banking support makes it unlikely that the sale of Iranian oil will have a significant impact on the market.
The subject of which country receives the monies from these sales is also a concern. Originally, the general license was supposed to have information on how the funds were supposed to be remitted for the Iranian oil, but this has not been implemented. This lack of transparency raises further questions about the legitimacy of these announcements and the true intentions behind them.
The oil market is becoming increasingly complex, with countries engaging in self-preservation and bluster to hide their true intentions. The latest announcements are a classic example of the 'oil shell game', where promises are made but little action is taken. This lack of transparency and accountability will have significant consequences for the market and the global economy.
The impact of these announcements on the oil market will be limited, with prices unlikely to decrease significantly due to the temporary lifting of sanctions. The real winners in this scenario are likely to be Asian refiners who have already accounted for Russian and Iranian crude oil, but even they may not benefit from the increased supply.
As the situation continues to unfold, it is clear that the latest oil announcements are a case of smoke and mirrors, designed to distract from the true intentions behind these actions. The lack of transparency and accountability will make it difficult to determine the real impact of these measures on the market and the global economy.
The latest oil announcements are a classic example of the 'oil shell game', where countries engage in self-preservation and bluster to hide their true intentions.
