What Oil Production Cuts: Iran Says It Won't Support Any Supply Cut Or Emergency OPEC Meeting

Tyler Durden's picture

The main reason for oil's torrid surge over the past 2 days is that following yesterday's Russia-Opec "oil production cut" headline fiasco, crude traders - who as we previously reported already had a record net short position - scrambled to cover their exposure on the assumption that where there is oily smoke, there will be fire.

We can now put to rest any speculation that OPEC will proceed with any supply cuts, whether Russia requests it or not, because as the WSJ reported moments ago, not only will OPEC not support a supply cut but it will also not support an emergency OPEC meeting.



Will oil respond negatively to this headline as it did so positively to yesterday's volley of speculation that sent it surging? Judging by the initial response, the short covering may have ended...

... although it remains unclear if it will undo all gains over the past 24 hours.

Still, remember the Saudis previously warned the oil market is oversupplied by about 3MM B/D, which means that all those fundamentals that ceased to matter this week will be back front and center in the coming hours, if indeed it is Iran's fault this time that OPEC simply is unable to reach an agreement.

As for the Saudis, they are delighted to point a finger at Iran as the culprit for why overproduction will continue, even as it is their ultimate strategy to put shale producers out of business. At least this way, the US energy sector can now blame Tehran instead of Riyadh.

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Dr. Engali's picture

Bastards! Selling us cheap oil. WTF? We need to drop some freedumb bombs on their asses and liberate them!  

NihilistZero's picture

Maybe the lifting of the Iran sanctions had a more interesting purpose than stated.  Allowing them to flood the oil market just as the Saudi's might have considered pulling back is gonna create issues among OPEC which has geopolitical ramifications for our frenemies the Saudis as well as giving Putin a headache.

Chaos continues to be the USA's number one export.  But that $50 in gas I'm saving a month helps pat my Obamacare bill so it's all good.  Apparently we like our cheap oil and will keep our cheap oil.

RockRiver's picture

Since the bottom last week open interest has increased from 1.3 million to 1.8 million. Highly doubt that it's new length. I think this bounce is attracting a lot of new shorts.

mandalou's picture

Let's say Russia wants a cut, How does this effect Russia/Iran relationship?

Ghost of PartysOver's picture

Putin is the puppet master and Iran the puppet.  But I think this became more about the conflict of Putin and the House of Saud concerning Assad then anything else.  US Frackers are now colateral damage.

mandalou's picture

Thanks for the input. Lots of runors flying around. I do agree with your statement about US frackers. They are in deep shit.

mandalou's picture

4m4 minutes ago

US ally Saudi Arabia can now point a finger to Iran as the reason for mass shale defaults


Great point Tyler!!!! and it backs Ghosts comment above about US frackers collateral damage.

DormRoom's picture

Iran and Saudi Arabia are in a cold war.  They are using oil as a proxy to gain control of Iraq, gain Chinese market share as a hedge against US agression, and middle east regional hegemony.  Russia can't do anything but wait, or make a cold war become hot, so it burns out faster.


oil prices will be determined by the market, and as backwardation in the future market takes hold, oil will flood the market, and push prices to ~23-27 USD/bbl.

KnuckleDragger-X's picture

Yep, but there's money to be made and hopium dreams are a lot shinier than that nasty dirty reality.....

mandalou's picture

Awesome points!!!

My only concern is if we hit $25 will someone intentionally make a war hoping to raise prices.

TRM's picture

It doesn't. They both are just yanking the Saudi's chain at different ends to see how screwed up they can make the house of Saud. Revolt in Saudi Arabia coming and it goes back to being "Arabia" shortly. Both Russia and Iran have other industries to weather the storm but Saudi Arabia doesn't. They both know it.

cossack55's picture

Nothing says "Liberty" like 2000 pounds of TNT

I need more asshats's picture

Let's hope not. I sold that rally yesterday and I'm now heavy short and I need to get comfortably far way from this level.

I see no hope for this market at all. Crude should be sub-$10 for June delivery.

Hugh G Rection's picture

Nothing says "Liberty" like the Israeli assault on the unarmed naval vessel, the "USS Liberty".

How apropos.  They attack our liberty and kill our servicemen to blame Egypt, get caught, and our Zionist whore politicians cover it up.

Then of course there are the Mossad fuckboys that get caught with truck bombs on 9/11 and that all gets brushed under the rug... Murca!


NoDebt's picture

It's all net new revenue to them now that Obama lifted the sanctions, why the hell would they talk about "cuts"?  Every barrel they export is more money in their coffers, even if the price is low.

E.F. Mutton's picture

Iran won't just drink your milkshake, they'll piss in it afterwards and hand it back to you.

blown income's picture

Next week another rumor...another pump. .train wreck that will never-ending happen 

Grandad Grumps's picture

Iran knows that the Saud are on the ropes ... and Iran is not owned by the BIS (Swiss/satanic) banking empire.

The Saud are trapped in their own web of corruption and arrogance.

roadhazard's picture

They had eighty eight years left ten years ago. That was based on what was going on then. They probably still have eighty eight years or more left by whats going on today. Plus like the Saud's recent off shore find they will all the sudden find another huge field.

Luckhasit's picture

Someone is gossping the oil markets hard.

Winston Churchill's picture

The other type of menage a trois.

I'd say the Saudis are about to get buggered by a bear.

TroyAndAbed's picture

It doesn't matter, oil at these prices won't last with all the CB madness coming down the pike. I'm staying long, it gets below $29 again I'm buying some more.

R-Squared's picture

Still hoping for sub-30. Short is still deep in the red.

DC Beastie Boy's picture

Perhaps demand and payment for oil in USD (petro dollar peg) is falling and depegging. You know...the old supply and demand...as demand falls so does price.

Watch as PMs and Energy starts to get priced outside of the USD like it already has.

Chuckster's picture

Saudi Arabia has said they can sell oil for $5.00 a barrel.

Iran has said they can sell oil for $1.00 a barrel.

There are trillions of dollars at stake across the globe.  Expect a story daily trying to raise the price of oil.  They had everyone one convinced $100 a barrel was a reasonable price.

I think we been averaging one rumor a day for quite awhile.

DC Beastie Boy's picture

That's what they were told to say. The collapse of the petro dollar peg will be blamed on the Saudis.

Additionally, I don't think for one minute Saudis continue to pump what they say and if they are it's because a lot of their large oil fields are massive majority water, like 98% from the h2o the pumped down there decades ago. Their oil may only be worth $5 or less per barrel. They never put money into refining because they knew one day their oil would be too costly to refine.

Why do you think Iran started back online and sanctions lifted? The Sauds are running out of oil. Just look at the war in Yemen, it's for their oil. Saudis will soon have no friends in the Middle East for more reasons than their depleted oil.

chairman mao's picture

This is how Iran thanks Russia, after sucking them into a costly war in Syria.

Can't help but feel sorry for the Russians, the Chinese are playing hard ball with them in gas price negotiations, Americans fucking them left right and centre, Assad now hates Putin because Putin asked him to resign, now this shit from the Iranians.

They are getting quite a bit of love from Japan though.

Truth Eater's picture

In America, when suppliers of the same product get together to FIX prices, this collusion is ILLEGAL.  But if you are a government, banker, oil company, or one of the elite agents, all is permissible.


Sherman Anti-Trust Act is the principle in a land without principles.