The firing
of US Secretary of State Rex Tillerson and if President Donald Trump removes
H.R. McMaster as national security adviser could impact major hydrocarbon
producers Iran, Saudi Arabia, and Russia, leading to a boost in crude oil
prices.
“With Tillerson leaving and if McMaster is out
as well, it’s looking like much more aggressive potential policies coming out
of the United States and I think that considerably ups the nervousness
throughout the energy market because the issues of Saudi Arabia and Iran will
come under greater focus, the issues with Russia will come under greater focus
so I see a risk premium being added to energy prices,” Justin Urquhart-Stewart,
founder of London’s Seven Investment Management, told New Europe on March 16.
CIA
Director Mike Pompeo, who was recently named secretary of state, has echoed
Trump’s denouncing of the 2015 Iranian nuclear agreement between the US and
other world powers. Tillerson, who was sacked on March13, had advocated for
Washington to stick by the deal, which led to the lifting of most international
sanctions against Iran in exchange for curbing its nuclear program. The deal
has led to an increase in oil exports from the Islamic country.
“It looks
as though the American policymakers, the teams are getting more hawkish and
therefore I think this is going to put a lot of pressure on the Iranian deal
and so it looks as though we might be heading to him refusing to renew it and
that’s going to have consequences,” Urquhart-Stewart said.
“I think
this may well push the oil prices up. It will be not necessarily on the basis
of demand, just out of sheer nerves as to which way this erratic presidency is
going because no one can trust what the policy is but it’s liable to be –
judging by the movement of Tillerson – moving more to the right, to be more
aggressive,” Urquhart-Stewart said, adding that will create a lack of
confidence and could easily put a spike on oil prices over the next dew weeks.
Analysts
wonder whether Israel might take a cue and adopt more provocative positions
further increasing oil market jitters.
Regarding
Russian energy supplies to Europe after the UK government announced a series of
measures in response to Russia’s refusal to respond to the accusations of
involvement in the poison attack against the ex-Russian spy Sergei Skripal and
his daughter, and the US issued a new list of individuals and entities that are
to be added to US sanctions, Urquhart-Stewart said, “the issue with Russia
certainly that seems to haven’t had too much affect of yet mainly because we
don’t actually know what the retaliation is going to be from Russia but so much
LNG (liquefied natural gas) is swashing around at the moment but that could
certainly cause concern throughout western Europe which are very dependent upon
Russian gas.”
For the
moment, despite the political risk, concerns that global crude supplies are
rising led to a weekly decline in oil prices. According to Reuters, US West
Texas Intermediate (WTI) crude futures remained unchanged at $61.19 a barrel on
March 16. Brent crude futures dipped 11 cents to $65.01 a barrel, a 0.2 percent
loss.
Asked if
the former Exxon Mobil CEO could act as a mediator between the oil industry and
the US Administration now that he left the top diplomatic post,
Urquhart-Stewart reminded that Tillerson did not get on well with Trump. “I
think he is just going to turn his back to Washington politics and go back to
the world he knows,” he said. “He is going to be out of the picture now – just
go back to the place where he is happiest, which is getting dirty in the oil
business.”
https://www.neweurope.eu/article/oil-markets-nervous-tillerson-sacked-mcmaster-way/