Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on June 11, 2016
Does Iran have the upper hand in OPEC oil war?
Traditional rivals, Saudi Arabia and Iran, continue to fight to prove their supremacy in OPEC. Neither gives up an opportunity to hurt the other, whenever and wherever they can, and oil seems to be their favorite playground.
With Saudi Arabia scuttling any chances of a production freeze in Doha in April, Iran has followed suit by thwarting attempts by Saudi Arabia to introduce a production ceiling on OPEC production in last week’s meeting held in Vienna.
Iran, which is close to its pre-sanction levels of production, had earlier agreed to discuss being part of any production freeze after it reached its desired output. However, Iran refused to adhere to any production ceiling, which led to OPEC abandoning the idea.
Iran has been a dark horse since the lifting of sanctions, increasing its market share quickly to the surprise of many investors.
Iran has resorted to offering large discounts to its Asian customers, undercutting the Saudi and Iraqi prices to levels not seen since 2007-2008 in order to regain their market share, reports Reuters.
Iran shipped 2.3 million barrels per day in April 2016, the highest level since 2012. These figures are 15 percent higher than the International Energy Agency (IEA) forecast. Iran has been successful in its strategy until now, but increasing its market share further might prove difficult.
Meanwhile, Saudi Arabia is attempting to cement its market share in the wake of this increased production from Iran and Iraq. Though Saudi Arabia is attempting to transition away from being an oil-dependent economy, its transformation depends on the successful listing of Saudi Aramco.
As part of its preparation for the listing, Aramco is gaining market share and improving its efficiency, according to its chief executive, Amin Nasser.
“We are preserving our market share, which continues to increase year-on-year,” he said in the interview. “This year, as last year, it is increasing. Our market share is picking up,” he added, without giving figures, reports Reuters.
Ian Bremmer, the president of political risk consultancy Eurasia Group, told Reuters that the Saudi’s looked set to increase production after speaking with executives and a member of the Saudi ruling family.
The struggle for supremacy between the two nations doesn’t show any signs of abating, and there is no clear winner in this showdown.
Though Saudi Arabia has large reserves, it is burning them at a fast rate. On the other hand, experts believe that the Iranian economy is better equipped to withstand lower oil prices because its economy is more diversified and has an educated and hardworking population.
Emad Mostaque, a strategist with the London-based research consultancy Ecstrat, echoed a similar view. He said that Iran is better equipped to cope with the long-term upheaval because it is less dependent on oil than Saudi Arabia, having raised more through general taxation than through oil duties last year, reports Fortune.
The fight between the two for supremacy in the Middle East region is unlikely to end anytime soon. Currently, supply outages to the tune of 3.5 million b/d are supporting the oil prices by creating a balance between demand and supply.
Once Nigeria, Libya, and Canada resume pumping at their normal levels, the effects of the struggle between Iran and Saudi Arabia will be felt. If both increase production, the world will be awash with oil, pulling prices back to the mid $30/barrel levels.
16 Comments on "Does Iran have the upper hand in OPEC oil war?"
rockman on Sat, 11th Jun 2016 2:41 pm
Upper hand??? LMFAO. Reminds me of an old cartoon: a terrorist holding a gun to his own head saying: “Don’t move or I’ll shoot!” Not a very good negotiation position. Just more of the same foolishness that the exporters control oil prices when it’s the buyers who are making that determination.
Hawkcreek on Sat, 11th Jun 2016 5:40 pm
I agree with that, Rock. I have cut my consumption at least 50% since I retired, and I think I am starting to really impact their bottom line. If they don’t start to show a little respect, I will have to go out and buy an EV.
Plantagenet on Sat, 11th Jun 2016 6:59 pm
If the Saudi gas station and the Iranian gas station decide to have a price war, there is’t much we can do about it except enjoy the oil glut and the low gas prices.
Cheers!
Anonymous on Sat, 11th Jun 2016 7:03 pm
Still going on about that oil glut plant? That’s so…… early 2016. It’s the king salmon glut we should thankful for. Pffffft, who needs oil when were literally swimming in plants ‘king salmon’ glut.
GregT on Sat, 11th Jun 2016 7:36 pm
“there is’t much we can do about it except enjoy the oil glut and the low gas prices.”
If gasoline prices ever get low again, I’m sure that the economy would quickly recover, and demand would skyrocket.
Cheers!
shortonoil on Sat, 11th Jun 2016 8:08 pm
“If gasoline prices ever get low again, I’m sure that the economy would quickly recover, and demand would skyrocket.”
When gasoline prices get low again, and the economy tanks anyway – GretT is going to be eating his own satire.
GregT on Sat, 11th Jun 2016 8:19 pm
Of course my satire would also include profitability at those same low prices. 🙂
Plantagenet on Sat, 11th Jun 2016 8:58 pm
Its difficult for the US to benefit from low oil prices because the middle class is currently being wiped out by Obama’s economic policies. Folks might save a few hundred bucks a year due to low gas prices, but thats not enough to cover their rapidly rising health care costs, taxes, and the lack of good-paying jobs.
http://www.zerohedge.com/news/2016-06-11/peddling-non-fiction-here-are-facts-about-americas-disappearing-middle-class
Cheers!
GregT on Sat, 11th Jun 2016 9:46 pm
Oil prices are not low planter, and despite your constant trolling, you already knew that.
Cheers!
Plantagenet on Sat, 11th Jun 2016 9:57 pm
@GregT
You are a classic example of the fact that it is the trolls who spend their time online calling other people trolls.
What better to disrupt conversations?
Cheers!
Truth Has A Liberal Bias on Sat, 11th Jun 2016 10:27 pm
Battle of the trolls lol what a bunch of fucking retards. Does anybody on this pathetic excuse for a peak oil blog have anything intelligent to say. Rockman obviously has knowledge and experience but the rest of you ass clowns are fucking retards.
GregT on Sun, 12th Jun 2016 1:43 am
Get your passport in order Claudia.
dooma on Sun, 12th Jun 2016 2:41 am
I wish my country had a 40 year old oil field that just keeps going up in proven reserves not matter how much it has had the crap pumped out of it….
Go Speed Racer on Sun, 12th Jun 2016 3:58 am
THIS IS A WEIRD WEBSITE. PEAK OIL does not have anyway to actually ‘post’ an article.
Also the owner of the website never speaks or communicates, to anybody.
Somebody should post this article:
http://www.cnn.com/2016/06/10/us/suspect-lassoed-in-parking-lot-irpt/
Go Speed Racer on Sun, 12th Jun 2016 4:02 am
OH fucking hell. POST THIS ARTICLE:
http://www.timesonline.com/news/shellcracker/proposed-cracker-plant-will-drastically-impact-regional-shale-industry/article_7ab4ad00-2f3e-11e6-8eb3-930c4360550f.html
The other link was a mistake.
Although, it had a cool video about catching a crook by horseback.
yoshua on Sun, 12th Jun 2016 4:34 am
The collapse in oil prices forced the oil producers to cut their spending to a minimal by cutting capex.
Since oil production is energy intensive and exploration and drilling is an energy intensive part of the production… then the cut in capex should add oil to this temporary glut… at least until the production starts to decline due to depletion of todays reserves on-stream .