Iran’s oil production cut drastically by US sanctions: Kevin Book

Channel: Fox Business
Published: 05/15/2019 08:52 PM

ClearView Energy managing partner Kevin Book on the rising tensions between the United States and Iran. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Main Street and Wall Street. Headquartered in New York — the bus...

Apparently this happened just moments ago to no doubt discuss the order he made this morning. Secretary pompeo says after iran-backed militia moved rockets near american bases in iraq. The u. s. is now ordering the evacuation of all non-essential workers from baghdad. Iran'S supreme leader insists. There'S nothing amiss telling state media, we don't seek a war and they don't either. They know it's ...
not in their interest. Pompeyo says the u. s. fundamentally isn't looking for war either, but with us allies, saudi arabia, blaming iran backed rebels in yemen, for attacks on their oil tankers and a pipeline. Could tensions spiral out of control and what does it mean for oil markets? We bring in kevin buck, managing partnerat, clearview energy and a member of the council on foreign relations.

Great to see you, sir, let me be blunt to you. I'M gon na be blunt with my first question. Okay, does this development involving iranian backed proxy forces have the potential to escalate into war between the u. s. and iran it does and it really it always has. It takes us back a long way liz. It takes us back really 12 years to when the u. s. started to really pivot on their ron policy, less aggressive on shooting down nuclear weapons and and trying to stop iran's missile development. More focused on iraq and and militias attacking us soldiers. Now we're back in that space, where we'reback in sort of the risk profile of the height of iran conflict from 12 years ago, not a good place to be. We were shoulder to shoulder with the iranians, maybe not friends, working together against isis.

This is a step back in a lot of ways. Iran'S oil production is is compressed substantially by our sanctions. Economically. That means we've cut down, essentially 80 percent of the production that they were exporting a year ago, gone because of our sanctions right now, that's our projection! For for may and 500,000 barrels per day or so, and so they're acting out they're acting out in three principal ways: withdrawal partial withdrawal from the jcpoa, the iran nuclear deal, they'regoing and threatening the strait of hormuz, through which 18 million barrels per day of oil travels. Every day and and also acting through proxies against american assets and allies and and so all three risk arena's work to their advantage as long as they stop short of war because they essentially raise the price of every barrel that iran still can sell. I'M looking at crude oil closed at $ 62 in the after market at 62, 20 on a day, it should have lost value because we saw a massive massive draw. I'M sorry massive bill: what 5. 4 million barrels over the week so that that should have been very bearish for prices. Instead, we did not see thatmost likely because of this tension. Let me bring up opec in general, because, yes, iran is a member of opec, saudi arabia. We can put these names up on the screen. Venezuela is certainly a hot point as you look at that it's far from that choke point of the strait of hormuz, but the tensions here.

When you look at venezuela and of course, iran, you know you can't call around socialist and it's an autocratic situation here. Venezuela, barely socialist, the ugliest of socialism, what's going on here, where energy, strong countries don't end up, treating their citizens very well. Well, yeah! The polarization of those economies is really the the fundamental flaw, because you have noeconomic incentive for private actors to invest successfully in venezuela, because you've had essentially a takings by the state more than a decade ago, again around 2007, when, when former late late, president hugo chavez Renegotiated nationalized, the industry, destroying the private incentive to invest in in venezuela really chased out all the international super majors, except for a few of them and left behind a lot of opportunity with no capability. And so when you, when you chase away that the capability from the resource base - and you just leave the military in charge of the oil company, you find yourself in dire straits. Even without the sanctions that the us has put in place. Yeah privatization is theway to go and what do they do they nationalize kevin. Thank you for your perspective. We do appreciate having kevin book.

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