Komeil Tayyebi told the Strategic Council on Foreign Relations that the United States has decided to present its reserved oil to global markets in order to reduce its rising price and exert more pressure on Russia.

“Although we have not fully entered the post-corona era, the challenges of the early period and the peak of the corona have diminished. At a time when many economic activities, especially in the transport and energy-intensive industries, have increased their activities, it is natural for new market demands to emerge”.

He added that even before the Ukraine crisis began, we saw rising oil prices due to rising demand for oil and petroleum products.

He emphasized that with the start of the war in Ukraine, the oil and food markets have been affected, and the longer the war lasts, the more these consequences will manifest themselves and the shortages in the world market will be created.

This Esfahan University College of Economics’ professor said Russia is the world’s biggest supplier of gas for industries and economies and a major exporter of oil.

“In the current situation, the market, along with increasing demand, is experiencing a decrease in supply. Although declining oil supply creates opportunities for other oil-exporting countries, rising prices have had consequences. Rising prices increase production costs, especially in oil-importing countries, which are mainly industrialized. It will even raise the price of energy carriers and create inflation that is largely unbearable for these countries in practice”.

Tayyebi said gas prices in Europe reached 345 euros per megawatt hour last winter, compared to just 20 euros per megawatt hour the year earlier.

He added that rising prices have been higher than expected, affecting consumer welfare and increasing the cost of producing industrial units. Under these circumstances, the United States, despite its abundant oil resources, seeks to bring some of these reserves to market to reduce the risk of oil shocks and to cover them.

“It should take about seven years to change energy policies in developed countries, especially European countries, so that they move towards investing in renewable energy and try to reduce their dependence on oil. Given this shortage of supply and rising demand, there are good opportunities for oil-exporting countries to sell more oil in the market”.

Tayyebi said the United States is making efforts to take energy as a political tool from Russia and has announced that it is intending to use one million barrels of oil per day of its strategic reserves in order to break the prices.

“In the last two years or so, we have seen about 7% inflation in the United States. If, due to rising oil prices and the oil shock, inflation due to production costs occurs and inflation reaches 10 percent and becomes double digits, it will have several consequences for the United States. The challenges for the US government will increase, especially with the congressional election”.

Referring to the tension created in the oil and gas market and the probability of boosting cooperation among petroleum producing countries in the form of a collective measure to create stability, he said that under these circumstances, the West may be able to provide an opportunity for Iran to address some of energy shortages in the world market by accelerating agreements and negotiations with Iran.

Pointing to the increase in oil exports of Iraq and talks to increase Saudi Arabia’s oil exports, as well as US efforts to reduce political tension in the region, he said that global buyers are pushing for alternative sources of crude oil, which has boosted US oil exports as the world’s largest crude producer in recent weeks.

“According to reports, the country’s crude oil exports in the week ending March 18 increased to 3.8 million barrels per day, which is the highest figure since July 2021 and the lowest figure of reserves in the last 4 years. In addition, the United States has offered the highest discount in the last two years for market management in this period”.

Referring to the US efforts to realize maximum energy embargo on Russia and the cooperation of other countries in order to exert pressure on Moscow, he said that despite the provision of this oil reserve, sanctions against Russia are absolutely not possible.

“We only may see restrictions on energy imports from Russia; But in the long run, Europe is moving to find alternatives to Russia with the cooperation of the United States, and even count on cooperation and investment in Iran’s energy industry, because Europe sees Russia as a more serious threat and Russia has failed in the war to attract the support of other countries”.

He said that the US decision to bring its reserved oil to market is a temporary solution, and we have seen such policies before. “During this period, the United States is trying to manage the market as much as it can, but this cannot continue in the long run”.