More Iranian crude may be coming to world markets

The U.S. may relax its sanction pressure on Tehran to allow more Iranian oil barrels to enter the global market, the head of Asian operations at Vitol, Mike Muller, told Bloomberg over the weekend.

“Uncle Sam might just allow a little bit more of that oil to flow,” Muller said. “If the midterms are dominated by the need to get gas prices lower in America, turning a somewhat greater blind eye to the sanctioned barrels flowing out is probably something you might expect to see. US intervention in these flows has always been pretty sparse.”

The Bloomberg report came out on the same day as a Reuters report citing unnamed sources as saying that the U.S. was also relaxing sanctions on Venezuela, allowing two European companies to ship Venezuelan crude to troubled Europe.

Muller’s comments come as the negotiations between the U.S. and Iran on a new nuclear deal appear to have reached an impasse. The Iranian side wants the U. S. to remove its Islamic Revolutionary Guards Corps from its list of terrorist organisations, and the U.S. appears unwilling to make that concession.

Meanwhile, the oil price situation globally remains quite tense, with Brent crude trading above $120 per barrel and West Texas Intermediate at over $119 per barrel at the time of writing, even after OPEC+ agreed to increase its monthly production boost target by more than 200,000 bpd.

Despite the diplomatic impasse, Iran has been preparing to rejoin global oil markets. The country has boosted production and exports to its main market, China. If a new deal is reached with the U.S., the flow of Iranian oil abroad could increase by between 500,000 bpd and 1 million bpd, according to analysts.

With the U.S. midterms looming large for Democrats, the current administration has a major incentive to strike a deal with Tehran, which could help push down retail fuel prices as it would also push down crude oil prices.