Iran Intends To Recapture It Full Share Of The World’s Oil Market
$OIL
Iran, once OPEC’s 2nd-biggest producer, now its 5th-largest, fully intends to “restore its lost share of the Oil market,” Oil Minister Bijan Namdar Zanganeh said on 6 May in Tehran. OPEC must accommodate his country’s increased output, he said.
OPEC’s strategy is working
The number of active US Oil drilling rigs has fallen by a record 60% to 646. And output from American shale formations fell in May for the 1st time since February 2011. The tight Oil producers have cut billions of dollars from their spending plans.
On the other hand, Saudi Arabia, OPEC’s biggest member and the architect of its strategy, is deploying the most rigs in at least 20 yrs, and operating with the lowest spare production capacity in about 3 years.
Iran and 6 global powers seek to finalize by 30 June the terms and details of a nuclear agreement that would curb Iran’s nuclear program in exchange for an easing of sanctions. Discussions are set to resume in Vienna this week to resolve some of the remaining issues.
Increased production from Iran, and Iraq, will heighten competition within OPEC for sales to the fastest-growing markets in Asia and test the group’s unity. It also threatens to kill the 40% rally in Crude Oil prices from a 6-year low in January.
Iran produced 2.8-M BPD of Oil last month. A lifting of sanctions that have dampened exports would drive much needed spending on the country’s Oil industry, which controls the world’s 4-largest reserves. Talks with giant foreign investors have already begun.
If a final agreement is reached, Western sanctions will probably be phased out rather than lifted at once, meaning additional exports from Iran probably won’t hit markets until next year..
A large amount of Iranian oil could come to market even before the country raises output. It has about 10-M bbl sitting in storage on ships, Deputy Oil Minister Roknoddin Javadi said.
By Reza Hashami, CEO, Global Modern Insurance, Inc.
Paul Ebeling, Editor
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