Oct 27, 2018 10:24 Asia/Tehran
  • Germany releases strategic fuel reserve to cope with disrupted oil delivery

The German government authorized the use of strategic oil reserves in order to mitigate the consequences of disrupted oil delivery.

Iran PressEurope: The German government has authorized the use of strategic oil reserves in order to mitigate the consequences of a record drought that has hit the Rhine area in the last few weeks.

Thanks to the record-low water levels in the river, the nation's internal deliveries of oil have been severely disrupted, Sputnik reported.

Months of scarce precipitation and hot sunny weather has driven the water level to such a low mark that German barges have either dramatically reduced their load in order to simply stay afloat or halted their service altogether. On Friday, Cologne reported a water level of just 73 centimeters.

While the railroad is able to deliver a certain amount of oil to customers, it is not nearly enough to compensate for the decreased river traffic.

According to German law, the government is authorized to tap the strategic reserve of gasoline, diesel and jet fuel to "relieve a local crisis situation."

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This is only the fourth time the government has done it in 40 years, Wirtschaftswoche magazine says.

As for the "local" part, the affected region stretches from Hesse to Frankfurt and then to Baden-Wuerttemberg, bordering the Netherlands, Belgium, Luxembourg, France and Switzerland.

​However, an economy ministry spokeswoman told reporters that the measure is only temporary and that it is "specifically aimed" at certain areas and that Germany is not facing a "long-term crisis."

According to Phys.org, German ingustrial giants Thyssenkrupp and BASF had to cut back production dut to "limited deliveries" or raw materials, while RWE energy group is struggling to supply the Hamm power plant with coal.

Other rivers have suffered because of the drought too, the report says, but without providing further details.

Along the internal dispute over deliveries of oil in Germany, the international instability that has occurred in oil market accentuates the dispute in Germany.

U.S. Energy Information Administration (EIA) predicted that Brent crude oil spot prices, which averaged 70 U.S. dollars per barrel in September, are expected to average 81 dollars per barrel in the fourth quarter of 2018 and will fall to an average of 75 dollars per barrel in 2019.

In the months following the full implementation of sanctions in November, the total volume of crude oil and condensate coming off the market will become more apparent. However, it is uncertain if there will be any other producers to compensate for lost supplies from Iran. Differences between any potential production response and the actual volumes would likely result in increased price volatility, according to EIA.

The higher crude oil prices at the end of 2018 and in 2019 will likely support increased global crude oil production.

Back in May, the US withdrew from a 2015 multilateral nuclear agreement with Iran and said it would re-introduce anti-Iran sanctions that had been lifted under the accord.

Washington reinstated a series of unilateral sanctions against Iran in early August and would re-impose a second batch in November which would primarily be meant to undermine Tehran’s oil exports.

Iranian Petroleum Minister Bijan Namdar Zangeneh stressed that if US lifts sanctions against Iran, then oil prices will decrease and the market will not be unstable anymore.


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