Analysis: What The Trump Administrations Sanctuons Iran Means For Corpus Christi and South Texas





Matt Briscoe
Publisher
The Southside Light

Corpus Christi, Texas—The Trump administration doubled down on Iranian sanctions Monday but what does that mean for South Texas?

In short, the administration said it will not renew waivers to buyers of Iranian crude when they expire May 2. In layperson's terms that simply means that beginning next month, all countries that continue to import Iranian oil will be subject to U.S. sanctions.

Interpretation of that means that South Texans will also very likely pay higher prices for gas and diesel over the next several weeks and months ahead.

While South Texans and Americans in general will likely be paying much more at the pump, some might be wondering what the endgame is for the Trump administration? Politically and diplomatically speaking The administration is strategically moving toward its own internal goal of reducing Iranian oil exports to zero.

Right out of the box, the move on Monday placed hard hitting economic pressures on the Iranian regime. Likewise, Monday’s move also gives Saudi Arabia and the United Arab Emirates (UAE) new political footing in the region because both of them have agreed to match lost Iranian oil barrel for barrel.

A storage facility stands alone in waiting in rural Nueces County
(Matt Briscoe, The Southside Light)


But back here at home in South Texas what does this mean except for higher prices at the pump? It actually means more than consumers might think when it comes to economic growth and stability. Just up the road in places like Freer, Three Rivers and Floresville which lie in the heart of the Eagle Ford Shale, experts say that we will likely see a major boost in production. The reason for that is because U.S. shale producers were caught a little off guard in 2018 when President Trump issued waivers on Iranian oil imports to China, India, Japan, Turkey, Italy, Greece, South Korea and Taiwan.

When that happened shale producers were not sure what to make of the move because it shook global oil markets to their core. Not only did the 2018 waivers catch OPEC nations off guard, it worried American energy producers and it ended up costing them a lot of money.

In 2018, President Trump said that he issued the waivers because of concerns about pressure on gasoline and diesel prices. But now, Monday’s move means that the Trump administration is putting the ball back into the Saudis and Emirates court hoping that they will step up and offset lost barrels that would have came from Iran and elsewhere.

However, from a producers and traders standpoint, everybody is waiting to see if the Iranian barrels actually come off like President Trump is hoping. The Saudis and the UAE will likely not want to be stuck holding the bag if the plan backfires and oil prices crash.

When we wake up over the next few days we will likely learn what this all means, especially from the standpoint of the Saudis and Emeratis. Initially, analysts say that more than likely WTI oil will head back to $70 a barrel and the average price for U.S. gas will probably climb to over $3.00 a gallon this summer and maybe reaching $3.50 here in South Texas.

U.S. energy companies will likely be able to recover some lost profits from the 2018 Trump administration waivers. Bad news for the rest of us is that the gas pump will certainly pack a punch over the coming months here in South Texas.

West Texas Intermediate sat at $65.84 at the North American close on Monday.

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