U.S. National Security Advisor Alters Vision for Oil Market

The latest dismissal of U.S. National Security Advisor John Bolton is granting petroleum markets some supply comfort.

It is with initial views that the U.S. foreign policy toward Iran and Venezuela will be less aggressive.

Brent crude oil prices plunged more than 2% after President Donald J. Trump announced through Twitter that he’d fired Bolton.

This was seen as widely held as one of his more aggressive foreign policy voices.

Meanwhile, petroleum production in Iran has declined by 40%. In April 2018, since Bolton took office in Venezuela, oil has fallen by 48%.

Trump retreated from a nuclear agreement between Iran and world powers in the month following Bolton’s appointment. The decision put pressure on the OPEC producer’s oil exports.

This is to the reason of the leading customers who rejected purchases to avoid being subject to U.S. sanctions once they were re-imposed in November last year.

In addition, the U.S. withdrawal also triggered conflicts within the Organization of Petroleum Exporting Countries, which is tracking output curbs to prop up prices.

Iran has accused fellow members, including Saudi Arabia, of looking for appropriate market share while its exports are under pressure.

The administration has stated continuously its objective to reduce petroleum exports from Iran to zero.

Trump’s Refusal to Extend Exceptions

Earlier this year, after Bolton protested regarding sanctions waivers granted by the U.S. to some Iranian customers, the Trump administration refused to extend the exceptions.

A senior market analyst at Price Futures Group Inc. Phil Flynn said, “The Bolton news is bearish as Bolton is a known hawk on Iran and the market is assuming that opens the door for talks with Iran.”

Meanwhile, petroleum prices recovered a bit from the initial drop, trading almost unchanged at $62.68 in New York.

At a White House news meeting, Secretary of State Michael Pompeo and Treasury Secretary Steven Mnuchin indicated they would remain committed to the “maximum pressure” campaign against Iran.

The statement was stated by Mnuchin after the Bolton announcement. Moreover, they are in lockstep with Trump on the issue.

Bolton was also noticed as a vocal challenger of extending waivers for the U.S. companies that stay doing business in Venezuela. It was after the administration intensifies financial pressure on President Nicolas Maduro.

Prolonged Waivers for The U.S. Companies

Last month, the U.S. lengthened waivers for Chevron Corp.

Several drillers were doing work in that nation. Petroleum output has also sunk from a high of 3.7 million barrels a day in 1970 to 742,000 now.

Currently, the 90-day waivers are in place due to expire on October 25.

A Washington-based energy consultant and former U.S. State Department special, David Goldwyn stated, “It’s possible but not likely that Bolton’s departure could open the door for another extension.”

He also added, “I would probably give it a 40% chance.”

Meanwhile, the spokesperson for Chevron had no immediate statement on Bolton’s departure.

Elsewhere, not everyone considers this move was changing the comparison for Venezuelan waivers.

In a phone interview from Miami, managing partner at consultant Caracas Capital Russ Dallen said, “I think the present position that the waiver’s going to end in two months is probably the position that will be maintained.”

Lastly, he quoted, “The wheels are grinding that way. But it’s just going to depend on who steps up to handle that position now.”