Sputnik - Oil prices rebounded on Tuesday amid concerns about rising tensions between the United States and Iran and oversupply. Brent crude oil was up 6 cents and stood at just over 73 dollars a barrel by Tuesday morning. The oil market received a boost on Monday after US President Donald Trump warned of dire consequences if Tehran threatened the US again.




Sputnik talked about�the oil market and Donald Trump�s call for�countries to�stop buying Iranian oil from�November with�Dr. Mamdouh Salameh, an international oil economist and a visiting professor of�energy economics at�ESCP Europe business school, London.

Sputnik: In your view how justified are the concerns of�oversupply and what effect will that have on�the oil market in�the near�future?

Dr. Mamdouh Salameh:�For the time being there is, what I call, a concerted effort by�many parties around�the world to�keep oil prices repressed. However, there is one fact which I have been always saying, is that the global oil market has not rebalanced completely till�now. There�s a bit of�oil glut, a small amount, which could take care of�outages in�Venezuela, in�Norway, in�Nigeria and in�Libya, and that, to�some extent, has been causing the prices to�remain stagnant to�some extent. The oil market will improve shortly and there is one important point�� what Saudi Arabia is saying, that it has added around�400,000 barrels a day to�the global oil market might not be true. You realize that in�summer, particularly in�July-August, Saudi domestic oil demand goes up�very significantly and that explains, to�a major extent, the announcement by�Saudi Arabia that they�re adding that amount to�the global oil market.

Sputnik: What losses can other oil producers endure following�the November deadline to�stop buying Iranian oil imposed by�the United States?

Dr. Mamdouh Salameh:�It will have no effect whatsoever. In my research and my discussions and at�my lectures I have been saying that the United States sanctions on�Iran will not have any impact on�Iran that they will fail. They will not cause Iran the loss of�a single barrel of�oil, and we know why. One, because the European Union, to�start with, is not going to�comply with�the sanctions against�Iran, and second, China has promised to�increase its oil imports from�Iran if there is a reduction in�Iran�s exports. Furthermore, Russia has a barter trade, like�Turkey and India, also with�Iran, so all of�this and, of�course, the most important part is the petroyuan, which is magnifying the effectiveness of�US sanctions and at�the same time providing another vehicle for�the oil producing countries of�the world to�bypass the petrodollar completely.

Sputnik: What impact has this had on�the American crude market then?

Dr. Mamdouh Salameh:�The American crude oil market, of�course, the Americans are saying that their output is increasing and they are exporting a bit. As usual, the Americans tend to�exaggerate the size of�the increases in�their production and the size of�their exports. They export less than�2.5 million barrels, maybe 2 million barrels, around�the world, but�most of�their oil is ultra light, which is used not as�a crude oil as�much as�sold to�refineries for�blending with�heavier crudes like�medium and heavy oil.

Sputnik: How likely are other countries to�follow the US President's calls to�stop Iranian oil then, and what�s your take on�this? How will these restrictions affect the Iranian economy?

Dr. Mamdouh Salameh:�It will not work. He (Trump) has been urging many countries, especially his allies like�Japan, South Korea and India, and many others, to�stop buying Iranian oil. Iranian oil exports go to�few countries around�the world; the top one is China, the second one is India, then Turkey, South Korea and Japan. Even Japan and South Korea are not going to�stop completely their oil imports from�Iran, they might try to�secure a waiver, which the United States might give to�South Korea, Taiwan and Japan.

As for�Turkey, it said it will not stop, it looks after�its own interests and it will continue to�buy Iranian oil. As for�India, they go hot and cold, they say at�one point that Indian refineries will stop importing Iranian oil�� that is not true, India does not recognize any sanctions except�United Nations sanctions, and with�the good deal they�re getting from�Iran, they�re going to�continue buying Iranian oil because the value of�their imports reached last month more than�700,000 barrels, and they�re getting very good prices for�that, so they�re not going to�stop buying Iranian oil. In a nutshell, the sanctions will fail and even America's allies will continue to�buy oil, in�addition to�other countries of�the world.