The fact that prices are not falling more sharply is mainly due to fears of further sanctions, Commerzbank's commodity analyst Barbara Lambrecht notes.

Sanctions fail to halt Iran’s Oil exports

"Since Sunday evening, further sanctions against Iran have come into force because the so-called snapback mechanism in the 2015 nuclear agreement allows for their reactivation if Iran significantly violates the agreement. However, it is not foreseeable that these sanctions will now lead to a renewed slump in Iranian Oil production. Severe sanctions are already in place here: Nevertheless, Iran has managed to increase its daily Oil production by a good 1.4 million barrels since the low in 2020."

"The most important customer – through bypasses– is China. In September, India also apparently purchased crude Oil officially from Iran for the first time. At the same time, an Indian delegation made it clear at a meeting with US government representatives that India would only be willing to reduce Russian imports if, in return, it were allowed to import more Oil from Iran and Venezuela."

"The example of an Indian refinery also impressively demonstrates how difficult it is to achieve a lasting goal with sanctions: In July, the EU imposed sanctions on this refinery because it was supported by Russia and processed Russian Oil. After temporarily reducing production, it is now apparently ramping up again. Tanker data from the analysis firm Kpler shows that new customers have been found in the Middle East, Turkey, Taiwan, and Brazil."