Sanctions – what sanction on Iranian oil?

Sanctions and the potential for dramatic reactions were driving oil prices higher in the spring. The EU and US sections would mean a tight oil market as the Iranian production would come off-line. Oil traded at a premium, but now oil prices are lower and some of the decline has to do with the lack of bit with sanctions. 

Iranian oil production is now at the same level as 1989 after its war with Iraq. It is producing about 3 million barrels a day from a high of 3.7 million per day in 2010. This is significant but not enough to deter the intentions of Iran. The EU sanctions are in effect as of July 1, but all 20 of the largest trading partners of Iran have exemptions and can still buy oil. Saudi Arabia jumped production in order to offset the Iranian declines, but the decline have not been as large as expected. The sanction disruption did not come and will not come as long as the main buyers of Iranian oil do get exemptions.