Iran Unleashes Oil Flood, Will Quintuple Crude Revenue In 2016
On Saturday, Iran marked what President Hassan Rouhani called a “golden page” in the country’s history when the IAEA ruled that Tehran had stuck to its commitments under last year’s nuclear accord.
Moments after the ruling was handed down, the US and the EU each lifted nuclear-related financial and economic sanctions on the “pariah state,” much to the chagrin of Israel and Tehran’s regional rivals who view the West’s rapprochement with the Iranians with deep suspicion.
"Everybody is happy except the Zionists, the warmongers who are fuelling sectarian war among the Islamic nation, and the hardliners in the U.S. congress,” Rouhani said, referring directly to Israel, the Saudis, and GOP lawmakers in the US.
In addition to the never-ending feud with the Israelis, Tehran is embroiled in a worsening conflict with Riyadh triggered by Saudi Arabia’s execution of prominent Shiite cleric Nimr al-Nimr and subsequent attacks on the Saudi embassy and consulate in Iran. The argument has raised the specter of an all-out conflict between the Sunni and Shiite powers and stoked sectarian discord across the region.
With sanctions lifted, Iran will now have access to some $100 billion in frozen funds and will be able to increase its oil revenue exponentially even as prices remain suppressed.
It’s easy to see why the Saudis and other Gulf Sunni monarchies are nervous. Iran plans to immediately boost output by 500,000 b/d with an additional 500,000 b/d coming online by year end. “The oil ministry, by ordering companies to boost production and oil terminals to be ready, kicked off today the plan to increase Iran’s crude exports by 500,000 barrels,” the official Islamic Republic News Agency reported on Sunday, citing Amir Hossein Zamaninia, deputy oil minister for commerce and international affairs.
“Iran could haul in more than five times as much cash from oil sales by year-end as the lifting of economic sanctions frees the OPEC member to boost crude exports and attract foreign investment needed to rebuild its energy industry,” Bloomberg reports, adding that “the lifting of sanctions means Iran can immediately boost oil revenue to about $2.35 billion a month, based on the country’s estimated current output of 2.7 million barrels a day and oil at $29 a barrel.”
Even if oil hovers between $30 and $35 a barrel, Iran will be pulling in some $3 billion a month by summer and nearly $4 billion a month by December.
"Iran's aging oil fields may present some challenges to the pace at
which it can physically raise production," Deutsche Bank wrote last year, as prior to the signing of the accord. Here's a bit more color:
Changes to Iran's sustainable production capacity in the medium term will likely depend partly on the speed and extent to which international oil companies (IOCs) invest in the development of Iran’s oil resources. Currently, 38% of Iran's oil production originates from three large fields and associated areas which began production decades ago (Gachsaran 1934, Ahwaz 1959, Marun 1965). Of the original resource contained in these three "super-giant" fields, only 23% remains now.
Further development drilling will likely be required in order to maintain production, and secondary techniques such as CO2 or associated gas injection may be required to improve the recovery rate and counteract falling reservoir pressure. Prospects for higher production would be improved by IOC participation. However, foreign investment has lagged not only because of sanctions, but also because of the government's buyback agreements which are considered unattractive.
On Sunday, Rouhani said the country needs between $30 and $50 billion in foreign investment in order for the country to hit its 8% growth target for the year. "Untapped potential in many industries indicates that domestic demand cannot solely push the economy toward eight per cent growth," he said. "Attracting foreign investment will be the best way of using the opportunity of sanctions relief to boost the economy and security."
But according to Israel, it's all a charade. On Saturday, The Times of Israel said that according to an unnamed "source in Jerusalem", the first thing Iran will do is send money to Hezbollah. "The implementation of the agreement would have a direct impact on the region, as terror groups Hezbollah and Hamas — both recipients of Iranian largesse — found themselves in possession of new and modern weaponry," The Times wrote. A statement from PM Netanyahu's office reads: "Even after the signing of the nuclear agreement, Iran has not abandoned its aspirations to acquire nuclear weapons, and continues to act to destabilize the Middle East and spread terrorism throughout the world while violating its international commitments."
We wonder whether Netanyahu would say the same thing about the Riyadh, where "acting to destabilize the Mid-East and spread terror throughout the world" is an explicit foreign policy aim.
In any event, Iran just got a $100 billion windfall and will be around $2 billion richer each month by the end of the year. The return of Iranian supply "will have an immediate impact in the spot market” Robin Mills, CEO of consultant Qamar Energy, told Bloomberg by phone. “Putting oil in the market is going to push it down." "Iran’s additional crude shipments have the potential to further depress prices, perhaps to as low as $25 a barrel,” Nomura's Gordon Kwan added on Sunday.
As for what effect a richer, more prosperous Iran will have on regional stability, we'd suggest that anything that serves to counter Saudi influence is probably conducive to a more secure environment. Besides, things can't get much worse in the Mid-East, so it's hard to see the downside.
Implementing #JCPOA not a detriment to any country. Our friends are happy & our rivals need not worry. We're no threat to any nation/state.
— Hassan Rouhani (@HassanRouhani) January 17, 2016
(17 votes)
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I agree something else is at play here. Some massive new reserve somewhere?
There is indeed a massive oil reserve in Iran that hasn't been tapped into because of the political instability.
No big oil company wants to invest 50 billion into an oil field and lose it because of nationalisation.
It's expected to be as large as the Saudi's before they started pumping up theirs.
Why do you think the Saudi's want to sell their oil companies in the market? Because they can still get a trillion out of it because once those fields go online in a few years, the value of their oilfields will fall off a cliff.
Especially since they are running dry.
Oil pre QE = $32
Oil QE = $110
Oil post QE = $29
What's so hard to understand? QE pumped up prices of all commodities, assets, and equities. Now that money is gone and everything will revert to the mean.
philipat
"oil consumption, whilst soft, hasn't fallen off a cliff."
I personally have not dipped any of the oil storage tanks, but all appearances are that inventories throughout the world have been building for more than a year, including ships.
So supply exceeds demand. And all the yakkity-yak about what the Chicoms have been doing, is that they filled up their tanks when oil got "cheap" around $50-60/bbl.
With the exception of heavy oil from the tarsands and Venezuala, most oil can be processed by most refineries.
Ergo- down go prices to the marginal cash costs of production and the amount of available cash held by the individual producer.
Saudi oil exports have barely moved comparing 2007 amd 2014/2015. New oil has come from USA, Russia & Canada. European demand dropped and as commodity demand falls - oil usage drops.
Ultimately you can attribute QE to this disaster.
It's about crushing Russia, plain and simple. They just want someone else beside Putin to work with.
Looney: if the Saudis decide to “bestow” a cut in oil production
Saudis can’t cut production because they won’t to be able to ever recover. Saudis are injecting 13 mmb/d (13 million barrels per day) of treated seawater, most of it to sustain production.
They will probably devalue the riyal instead. That way they can keep pumping and wrecking the US shale industry while also reducing the shortfall in funding their liabilities.
what gets ignored is the issue of many jews voting for the iran treaty, against netanyahoo.
there are forces more powerful than netanyahoo over jews in congress.
who does the head of aipac really serve.
Not all Jews dig Netan and some are getting nervous about American boredom with the perpetual war policy on their behalf. Coulter and Trump represent a sea change.
this is all by plan, moar war baby.
the wild card that could back fire is oil trading outside the petro dolla regime.
enter russia/iran/china buyer/seller cartel. tyme will tell the real story...
It will be Russia/Israel/China. Bankers are through with USA and are preparing to switch to Russia and China. The American economy will be detonated and a new regime will emerge. Thats your banker NWO. It's going to be harsh.
Agreed. Here's the problem. When a tribe hangs together, it reaps benefits on the way up, and punishment on the way down. When the shit hits the fan other peeps don't stop to make fine distinctions. It's unfortunate. When the innocent get penalized along with the wicked. That's why its ALWAYS important to stand on PRINCIPLE. Not linking arms and protecting the wicked due to ethnic or religious or national "exceptionalism". Cause those who have been abused, cheated and decieved won't be splitting hairs. It is what it is.
"who does the head of aipac really serve."
Satan.
Perhaps AIPAC is just another Soros front group (JASFaG)
Calgary Stampede!..........To the poorhouse
Good, those chuckwagon races suck anyway. If Calgary is so proud of that event , why don't they televise the mercy shootings after the race?
the stew--pede/stu--pede
Iran is calling the shots.... http://www.telegraph.co.uk/finance/oilprices/12104064/Iran-sanctions-Mid...
""Everybody is happy except the Zionists, the warmongers who are fuelling sectarian war among the Islamic nation, and the hardliners in the U.S. congress,”"
Holy Fuck!
First, I find more "honest" information in the CHINESE media than the USA.
Then, those commy RUSSIAN fucks make more sense, and appear more trustworthy, than the USA Government.
And NOW, I'm agreeing with religious fucking nutjobs in Iran?
I must be on the wrong meds, or dosage, or have some bad reaction to the mix fucking with my head.
remain calm: oil industry is going to get crushed. I guess obama did like Texas being so economically vibrant, well he fucked them.
Remain calm, it’s obvious that you weren’t around the 80’s. And that you didn’t do some research before issuing a comment.
Don’t take my word for it, even that my first job in Brazil was with Zapata Marine Services.
Reagan's oil legacy........for the misinformed:
https://www.youtube.com/watch?v=02F-3l1EKsA
Correct, the oil industry will (and is getting) crushed. To assume that Obama is Texas' problem however, is to assume the Fed is not political. It is, and it was the Fed (and by extension, Obama) which helped Texas make billions during the oil price run-up post crash with their QE.
Texas, possibly along with Wall St, was the biggest beneficiary in the nation from QE.
SteveNYC: Texas, possibly along with Wall St, was the biggest beneficiary in the nation from QE.
Good, and correct point.
And, if I may add: If oil is left to the nonexisting free market that the ideologues love to bring it up, because real business can’t tolerate free markets, oil would be over $100 dollars a barrel. And shale over $120 dollars.
WAY too many players in the oil business; some HAVE TO sell everyday, others jump in when the price is right...only "Peak Oil" can bring back $100 oil...hey, what happened to "Peak Oil" anyway? I swear, a couply years ago, the preachers we proclaiming we only had a couple days worth of oil left in the ground:(
AND...what the fuck happened to "Global Climate" change causing warmer temps...it's January and I'm freezing my fucken ass off!..like I have for the last 70 years!..pretty sure my grandpa's ass was blue in the winter too!
Dead wrong. The Arabs, Russians, Brazilians, Canadians and Venezuelans along with Wall St were the biggest beneficiaries. They all produce more oil than Texas. Wall St got $4.5 trillion in stimulus
sun tzu: Arabs, Russians, Brazilians, Canadians and Venezuelans along with Wall St were the biggest beneficiaries.
sun tzu, how do you expect anyone to take you seriously with a statement bundling all these together as one? Arabs, even some Canadians institutions are likely. Brazil and Venezuela, with some promise that their oil won’t go to their population, you might have a case there. But Russia? C’mon.
Check this out. It’s by Michael Hudson:
IMF joined the New Cold War. It has been lending money to Ukraine despite the Fund’s rules blocking it from lending to countries with no visible chance of paying (the “No More Argentinas” rule from 2001). When IMF head Christine Lagarde made the last IMF loan to Ukraine in the spring, she expressed the hope that there would be peace. But President Porochenko immediately announced that he would use the proceeds to step up his nation’s civil war with the Russian-speaking population in the East – the Donbass.
That is the region where most Ukrainian exports have been made – mainly to Russia. This market is now lost for the foreseeable future. It may be a long break, because the country is run by the U.S.-backed junta put in place after the right-wing coup of winter 2014. Ukraine has refused to pay not only private-sector bondholders, but the Russian Government as well.
http://michael-hudson.com/2015/12/the-imf-forgives-ukraines-loan-to-russia/
Expensive oil, Whitey sad. Cheap oil, Whitey sad. What make Whitey not sad?
Big tits and a hot body.
Heheh. The universal healing/anti-deppresant agent for hetero males.
If you are lucky enough to marry a woman like that, you will weather all of life's turbulences and challenges just fine.
Eirik the castrated feminized libtard Scandinavian moans like a woman while submitting to his muzzie masters.
ZD1, the self-fisting silo-dwelling troglodyte, softly sings himself to sleep, "this is my rifle, this is my gun..."
Jobs, ya Bob Ross looking reggae junkie jew. ;)
Obama's Peace Prize will blow up in his face before this is over.
So now cheap oil is Obama's fault too? lol
They fucked themselves.
Fuck oil? Obama is fucking Green-energy far more than oil, they were almost competitive at $140/ barrel
At $30/ barrel you have to be brain dead and economically suicidal to push green energy.
Abengoa eats shit-in spades
Abengoa-that would be the Obama donor base
Dats allotta mullah!
"mullah you can believe in!"
... or ...
"Hope and mullah."
If you like your mullah, you can keep your mullah.
22 large tankers: http://www.ibtimes.com/iran-readies-oil-tankers-india-un-prepares-lift-s...
And something from Reuters: http://www.reuters.com/article/iran-crude-ship-idUSL3N0WR4I520150325
From March of 2015? Thanks for the breaking news.... Putz.
one dollar fifty-seven cents per gallon here in land of kudzu, cows, caucasians
$2.95 per gallon is the average price today for regular gas here in the turd world land of communists, illegals, whores and welfare queens (Los Angeles).
California gas prices include 59.02 cents per gallon for state and federal excise taxes and an additional "cap and trade" fee for global warming that ranges between 12 to 20 cents per gallon.
http://www.latimes.com/business/autos/la-fi-hy-gas-prices-standing-htmls...
On the bright side, at least you have at least one NFL team to cry over (and maybe they will bring lots of that Belgian Beer)
Dude, leave those butthurt St. Louisans alone.
Yes $20 a barrel, but this is not going to end well!
The elite will soon run and hide in the bunkers paid for with citizens taxes, after engineering a full economic collapse as well as starting WW3, plus they will make sure that there are enough Jihadi's in the West to start a race war.
That should be enough to cover up the failed fiat ponzi scheme and take care of the 'excessive' population......
http://beforeitsnews.com/global-unrest/2016/01/the-lion-is-it-time-to-fi...
My last month paycheck was for 11000 dollars... All i did was simple online work from comfort at home for 3-4 hours/day that I got from this agency I discovered over the internet and they paid me for it 95 bucks every hour...
Try it yourself... www.wallstreet34.com
You'll never see a cent of that money, because there's nothing in there...
Sounds like You have big tits and a hot body.