Some background on why the impact has been muted: The Trump administration granted temporary waivers to Iran’s largest customers, including China, India and Japan. Oil traders took the administration’s generosity to mean that the eventual cuts to Iranian exports might be less than expected. “The market was quite surprised to see that waivers were granted,” said Homayoun Falakshahi, an Iran analyst at Wood Mackenzie, an energy research firm.
Mr. Falakshahi said the granting of exemptions to Japan and South Korea, which had stopped buying Iranian oil, was particularly striking. It might indicate, he said, that the administration’s priorities leaned more to keeping prices low for American consumers than squeezing Iran. If so, the strategy seems to be working. The price of regular gasoline in the United States on Tuesday was $2.61, compared with $2.85 a month earlier, according to AAA.
What will shape prices in the next few weeks?
Analysts say pressure is building on OPEC to shore up prices when the organization along with Russia and other producers gather in Vienna in early December. Analysts expect production cuts of around one million barrels a day, about 1 percent of world supplies, to be announced.
There is little doubt that the Saudis can make cuts of this scale. After all, they have lifted production by almost 700,000 barrels a day compared with their average output in 2017.
Saudi Arabia, which tries to avoid taking the pain on its own, may struggle to persuade producers like Russia and Iraq to join in making cuts, analysts said. The Saudis may also need to navigate a tricky path between the pressures from the Trump administration for lower oil prices and their economy’s need for higher revenues.
There is a good chance, analysts added, that producers such as Russia and Iraq may decide that going along with cuts is in their self-interest. “In the end we think Putin will make the same call as he did in November 2016 and opt to join the OPEC producers because of domestic fiscal considerations,” Helima Croft, an analyst at RBC Capital Markets, wrote in a note to clients on Nov. 14.
A few months ago the Saudis seemed to have steered the market back to what were, for their purposes, more comfortable price levels by orchestrating output cuts with Russia and other producers. Now the Saudis and their oil allies are again in the uncomfortable spot of being squeezed, mainly by shale-oil producers in the United States.
“They are back having to stop the market from falling rather than having to worry about the market rising,” said James Davis, an analyst at FGE, an energy consulting firm.