Iran's Oil Exports Blocked by US as Global Market Tightens

Iran's oil exports have effectively been blocked by the US since the 'deal to make a deal' collapsed in July, according to Bob McNally, president of Rapidan Energy Group. The blockade was reinstated in the Gulf of Oman, aimed at preventing Iran from exporting its oil.

The Kharg Island terminal, which handles more than 90% of all Iranian shipments, has stopped exports, making Iran's oil volumes irrelevant for global oil market balances, McNally said. 'Iran has stopped being a factor for the oil market in terms of its exports because of the blockade,' he stated.

The futures market is underpricing geopolitical risk, according to McNally, who notes that refined product prices are already reflecting tightness in the global oil market. The diesel crack spread hit record highs in both the US and Europe this week, with a premium over crude prices reaching as high as $102 per barrel on Monday.