China’s Unofficial Drawdown of Oil Storage

President Trump’s decision to withdraw the U.S. from the Iran Nuclear Deal is part of his plan to impose maximum pressure on Iran with an over all goal to reduce Iranian oil customers to zero by November 2, 2018. Concerns are being raised that Trump’s sanctions, and pressure on his allies to not buy Iranian oil, would plunge the world into recession destabilising the oil market and sending oil prices sky high. Barbara Slavin, director of the Future of Iran Initiative within the Atlantic Council, weighed in on the matter agreeing that there is a great possibility of a global recession with her concerns being echoed by other leading oil & gas experts. However, a satellite image was posted by TankerTrackers comparing July 2017 data to July 2018 against official reports. The satellite images show a massive drawdown of crude oil being stored in China over the last year while the official reports say the opposite.

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Satellites to Track Commodities

Satellite images are used by companies like Orbital and Bloomberg to asses the actual volume and flow of oil globally and this isn’t the first time that its been reported that China’s actual numbers differ from what they officially report. China’s drawdown in crude oil storage is timely with the loss of Iranian oil and coming sanctions. How many sites may indicate further supply discrepancies and will Iran’s oil truly be missed?

Iran, in counter suite to President Trump’s most recent power play, has been frantically meeting with other nations in attempts to secure trade deals before Trump’s sanctions go into effect. From meetings with Switzerland and Austria to discussions with Russia on investing in Iran’s oil industry Iran’s incompatibility with other nations legal systems is severely reducing the probability of Iran being able to close a trade deal before the sanctions go into effect.

TWITTER ENTENTE Between Rouhani and Trump
“America should know that peace with Iran is the mother of all peace and war with Iran is the mother of all wars.” — Rouhani

Imagine reading these tweets as a soldier on a ship in the Strait of Hormuz. Iranians are threatening that if Iran isn’t able to export oil then no other country will be allowed to do so. Iran’s military strength to actually close the Strait of Hormuz has been debated in the media but according to this article that cites a U.S. Naval intelligence report if you combine all the recent efforts of the Islamic Revolutionary Guard Corps’ (IRGC) naval division they will have enough manpower through modern fast attack craft, small boats, and anti-ship cruise missiles and mines that within the small confines of the Strait they would have a good chance of closing it, at least for a time.

The Curses of Isolation

Iran is down to the wire with sanctions going into effect in just a few short weeks and with the media pressure on Iran to respond to Trump’s power play Iranian national security official Naghavi Hosseini told the Al Jazeera that “the United States will only hurt and isolate itself with these sanctions. Europe, China, and Russia, according to Iranian government, still have interest in trade agreements with Iran.” Some of these countries are asking for waivers from sanctions. Now this could allow for trade agreements to move ahead, though even with waivers, companies still face issues with difficulties in banking, credit, intellectual property, shipping, and other areas. These were experienced in some of the trade deals that emerged from 2015. Isolation in truth goes both ways.

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