To: Johnny Canuck who wrote (63985 ) 6/17/2025 4:06:01 AM From: Johnny Canuck Read Replies (1) | Respond to The Oil Price Spike That Wasn’t
Global production is well placed to cope with Iranian disruption.By The Editorial Board The big news in oil markets since Israel’s attack on Iran’s nuclear program is the price spike that wasn’t. Brent crude popped from $66 a barrel or so to a high of $78 last week, but by Monday it was back below $73. The non-panic owes to ample global supply, and it’s a lesson for Congress and the Trump Administration as they contemplate putting new sanctions on Russian oil exports. Wars are unpredictable, and an Iranian attack on Saudi oil fields or shutting down the Strait of Hormuz is possible. Iran has made so many self-damaging mistakes leading up to this war that another can’t be ruled out. But global oil production is in reasonable shape to cope with anything short of catastrophic disruption. Saudi Arabia has been producing more, as have Guyana, Brazil and Canada. U.S. production hit a record 13.5 million barrels a day in March. A sustained price of $70 or above would be welcomed by U.S. frackers, some of which have been taking rigs offline as prices slipped toward $60. The lesson for President Trump is that oil prices shouldn’t influence strategic decisions about whether to help Israel win its war, or whether to further sanction Russia. President Biden—or whoever made decisions in his White House—resisted tough sanctions on Russian and Iranian oil out of fear that U.S. gasoline prices might rise. Rather than ease its regulatory attack on U.S. producers, the Biden team relaxed sanctions on Iranian oil exports, giving Tehran tens of billions of dollars to finance its nuclear program and proxies. Meanwhile, with the help of the Chinese and Indians, Russia has evaded a price cap on its oil exports by G-7 countries. The cap restricts ships that are owned or insured by Western companies from transporting Russian crude that sells for more than $60 a barrel. While the cap reduced the price of Russian crude by about $10 a barrel, it hasn’t crimped the Kremlin war machine. Russia last year exported on average 7.5 million barrels a day, a mere 400,000 less than in 2021. That translates to about $450 million a day in oil revenue at a price of $60 a barrel. China and India have benefited from buying Russian and Iranian crude at somewhat discounted prices and that will continue unless the U.S. tightens sanctions. Europe and the U.K. want to lower the price cap to $45 a barrel, though this wouldn’t much squeeze the Kremlin since most Russian crude is transported on “shadow tankers” not covered by the cap. A more effective idea is to impose secondary sanctions on countries that buy Russian energy, as a bill championed by South Carolina Sen. Lindsey Graham would do. The Sanctioning Russia Act of 2025, which has 83 Senate co-sponsors, would impose 500% tariffs on countries that purchase Russian energy if the President finds that Vladimir Putin continues to refuse to negotiate a peace agreement, attack Ukraine or subvert its government. The goal is to ratchet up pressure on China and India to stop buying Russian crude. Countries that provide military or economic support to Ukraine would get a 270-day tariff exemption. The Trump Administration has resisted backing the bill owing in part to concerns it would increase oil prices. But the market would adjust. In any event, as Mr. Graham noted Sunday on CBS’s Face the Nation, “you pay now or you pay later. If we get Iran right and we get peace with Russia, Ukraine, not only do oil prices come down, the world will be better off.” America, Ukraine and Israel would be in a better place if the Biden Administration had understood this, but Mr. Trump can learn from his predecessor’s mistakes. Appeared in the June 17, 2025, print edition as 'The Oil Price Spike That Wasn’t'. 3 Comments , click here . Questions can be sent to moderator@wsj.com.What do you think? 3 People typing Sort by 3 People typing rp · · LL (Edited) · · KS · · Powered by Terms | Privacy |FeedbackOPINION opinion May 23, 2025 opinion May 2, 2025 opinion April 25, 2025 opinion March 31, 2025 opinion March 23, 2025
