September Breakthrough Advisor Preview | Production Dynamics Amid Iran Sanctions

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Abundant geopolitical activity in July set the stage for ongoing uncertainty in August. The first wave of re-imposed US sanctions on Iran were implemented at the beginning of the month, though the second round of sanctions – which will include crude oil – do not take effect until November. The dialogue leading up to the implementation of the sanctions will soon become a reality, adding overarching complexity in the global crude oil landscape. Additionally, banter concerning OPEC production quotas emerged as a topic of discussion, as thoughts surrounding the interpretation of current production quotas proved a contentious topic.

In this month’s edition of the Breakthrough Advisor, the Applied Knowledge team addresses how the continued stress surrounding OPEC and geopolitics impacted global markets. In addition, they will discuss how US crude production and refinery efficiency will impact your transportation supply chain.

Iran Sanctions and OPEC Production

Iranian oil production, export quantities, and their ensuing position in the global oil conversation continues to complicate what the future oil environment may hold. Additional concerns came to the surface involving OPEC production quotas and which nations should be responsible for meeting expectations. Additionally, debate lingered about how additional production should be dispersed when OPEC nations experience lacking oil production or unexpected outages. OPEC mogul Saudi Arabia believes quotas should be considered aggregate, meaning total production from individual OPEC members should be used when accounting for total production quantities. Iran, on the other hand, believes each participant in the cartel should be designated a specific production quota, rather than be held responsible for picking up the slack for nations with struggling output. This defensive approach to oil production solidifies Iran’s current position in the oil industry, impacted dramatically by the first round of US-imposed sanctions, revealing their uncertain future will likely impact global supply and demand fundamentals.

Find out how geopolitical events continue to shape the global oil industry and influence your transportation supply chains in this month’s Breakthrough Advisor.

Refinery Utilization

The cost of fuels required to move goods to market is heavily driven by the behavior and performance of the international refining landscape. When refineries operate at near-maximum capacity with little interruption and continuous demand for refined products, price behavior is dependent on outside variables to move the needle upward. August refinery utilization rates in the United States were the highest since 1999, following the same course as domestic crude production in the United States. While oil production booms, refinery utilization grows, and refined product demand remains robust, global supply-demand imbalance is likely to come from outside US borders and the respective controversy associated with geopolitics and global conflict.

Will fuel prices be impacted by geopolitical uncertainty in the Middle East, or will growing US oil production and strong refinery utilization rates help mitigate price risk in the international marketplace? Hear what the Applied Knowledge team has to say about August’s market trends in this month’s Breakthrough Advisor.

This edition of the Advisor publication provides a detailed analysis of the industry’s most recent news and data-driven insights pertaining to your fuel management strategies. If interested, you can gain further insight into fuel market dynamics and trending industry topics by signing up for the Breakthrough Advisor Brief or contacting the Applied Knowledge team directly.

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