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Page added on April 10, 2016
Iran and Oil: You Ain’t Seen Nothing Yet
“Freeze” is a word rarely heard in balmy Doha, but it will be the talk of the town this week.
That isn’t because a delegation from frigid Moscow plans an unusual appearance at a meeting of oil exporters being held in Qatar’s capital next Sunday. The star of the show, and quite possibly the spoiler, will be from nearby Iran.
Several large oil producers have pledged to freeze output at current levels if others do the same. But Iran, recently freed from sanctions, is in the process of ramping up output and in no mood to stop.
A funny thing happened when restrictions were lifted on Iran, though: the market sold the rumor and bought the fact, as it were. Oil prices were under pressure at the prospect of Iran’s return but have bounced 50% over the past two months.
ENLARGE While such upside-down reactions aren’t unusual in some markets—bond yields acting oddly after Federal Reserve policy changes, for example—there is as much of a fundamental as a psychological basis in this case.
The number that everyone in the energy market has penciled in for Iran’s output, absent voluntary restraint, is 4 million barrels a day. That number stems from both the country’s presanctions peak and Iran’s stated ambition.
Whether it gets there and how quickly is a matter of disagreement. Iran’s oil minister Bijan Zangeneh said that for the one-month period ended April 19, exports would be some 2 million barrels a day. He also predicted that exports will have reached 4 million by next March.
The current export figures are an improvement but lower than expected. True, Iran’s fields and infrastructure are sorely in need of investment, and production can’t simply be switched on and off. But analysts thought the country had 30 million to 50 million barrels or more stored in a giant fleet of supertankers in mid-January.
Many of those tankers aren’t completely seaworthy, though, or lack proper insurance for voyages to European ports. There also have been reports of Saudi Arabia and Bahrain restricting port access to Iranian vessels.
A more significant problem according to Helima Croft, head of commodity strategy at RBC Capital Markets, is residual U.S. sanctions on dollar transactions. That has made Iran’s re-entry onto western markets difficult.
The upshot is that Iran’s slow start may have given false comfort to the rebounding oil market. Some analysts think that the amount of Iranian crude stored on supertankers has even increased.
Betting that those barrels won’t show up at a refinery soon or that Iran will willingly cut short its return to the oil market would be naive.
12 Comments on "Iran and Oil: You Ain’t Seen Nothing Yet"
geopressure on Sun, 10th Apr 2016 3:52 pm
“Betting that those barrels won’t show up at a refinery soon or that Iran will willingly cut short its return to the oil market would be naive”
Well, WallStreet Journal, those barrels have not gone anywhere yet, have they? & Iran seems to be in no hurry to ramp up production/exports…
Anyone seen this article about the CIA paying reporters / Pundits to use their talking points & push their narratives???
http://www.zerohedge.com/news/2016-03-28/top-german-journalist-admits-mainstream-media-completely-fake-we-all-lie-cia
Boat on Sun, 10th Apr 2016 4:22 pm
geo,
So if Iran oil exports go up, expected to go up even more and the Wall Street Journal reports on it the CIA controls the information?
Lol, that’s crazy talk.
joe on Sun, 10th Apr 2016 4:56 pm
Fact is, we are seeing the greed of the rich outstipping the ability to deliver, and not every poor jobless jihadi can make it to Europe, despite Mrs Merkels best efforts, so as some point economic reality will meet political impotence and the incestuous oil/war/money/race/religion relationship produces its last deformed child the whole world might wake up. Untill then we will permit the xenophobic-racist-bigoted nations that keep us in our warm beds to rig the energy game and exclude or permit any players it wants.
Plantagenet on Sun, 10th Apr 2016 6:02 pm
If Iran does up their production and oil exports by another 2 million bbls/day the oil glut is going to get worse——much worse.
ennui2 on Sun, 10th Apr 2016 8:04 pm
Translation: It’s still a glut.
GregT on Sun, 10th Apr 2016 9:22 pm
“Lol, that’s crazy talk.”
So what, exactly, do you believe that the CIA does Kevin?
makati1 on Sun, 10th Apr 2016 9:34 pm
I know! I know! LOL One of the things the CIA does …
“Vice’s Jason Leopold (4/6/16) has uncovered documents showing the CIA had a role in producing up to 22 entertainment “projects,” including History Channel documentary Air America: The CIA’s Secret Airline, Bravo‘s Top Chef: Covert Cuisine, the USA Network series Covert Affairs and the BBC documentary The Secret War on Terror—along with two fictional feature films about the CIA that both came out in 2012.
The CIA’s involvement in the production of Zero Dark Thirty (effectively exchanging “insider” access for a two-hour-long torture commercial) has already been well-established, but the agency’s role in the production of Argo—which won the Best Picture Oscar for 2012—was heretofore unknown. The extent of the CIA’s involvement in the projects is still largely classified, as Leopold notes, quoting an Agency audit report:
However, because of the lack of adequate records, we were unable to determine the extent of the CIA’s support to the eight projects, the extent to which foreign nationals participated in CIA-sponsored activities, and whether the Director/OPA approved the activities and participation of foreign nationals…. Failure on the part of CIA officers to adhere to the regulatory requirements could result in unauthorized disclosures, inappropriate actions and negative consequences for the CIA.
The CIA’s history of producing or helping to produce films goes back decades. The Agency, for example, secretly bought the rights to Animal Farm after Orwell’s death in 1950 and produce an animated adaptation centered on demonizing the Soviet Union rather than capturing Orwell’s broader critiques of power.”
http://fair.org/home/cias-work-with-filmmakers-puts-all-media-workers-at-risk/
American’s have no idea how many ways that are brainwashed every day. None at all.
peakyeast on Mon, 11th Apr 2016 12:33 am
oh boatie – thou art truly an innocent little child.
onlooker on Mon, 11th Apr 2016 8:05 am
Yeah boat, CIA is a friendly puddy cat and has the best interests of Joe6six pack in mind. CIA and mind control techniques and influence of the media etc. are all well documented as is their extracurricular activity in foreign countries sponsoring and teaching techniques of torture and assassination. Does the School of the Americas ring a bell, I suppose not. Living in lala land is so cool you get to see things the way you wish too not the way they care. careful though reality has a way of intruding on the most elaborate self delusions.
Boat on Mon, 11th Apr 2016 8:56 pm
onlooker,
Joe6pack dosen’t about Iranian oil. They do care about the price at the pump.
GregT on Mon, 11th Apr 2016 9:51 pm
@Kevin,
“onlooker,”
“Joe6pack dosen’t about Iranian oil. They do care about the price at the pump.”
What does this have to do with what onlooker said above? Or what you said above that?
Apneaman on Mon, 11th Apr 2016 9:55 pm
“@Kevin”
LMAO