November 5, 2015


Iranian Oil Goes Back on the Market : After years of sanctions, the country is boosting production and aiming to win customers back from the Saudis and Russians. (Javier Blas, 11/05/15, Bloomberg Businessweek)

The country's return to the oil market comes as the world is producing much more oil than it needs. According to the International Energy Agency (IEA), global oil production in the first half of 2015 averaged 95.7 million barrels a day, while average daily consumption came in at only 93.8 million barrels. The difference of almost 2 million barrels a day--equal to the daily consumption of France--has forced traders to turn supertankers into floating storage facilities. The Iranians had to make a similar move when sanctions hit in 2012, converting their extensive fleet of crude tankers into giant storage bins that have spent much of the past three years anchored in the Persian Gulf.

More Iranian oil on the market in 2016 will extend the oversupply. The impact will reverberate across the world, hurting oil-producing countries such as Russia, Saudi Arabia, and Venezuela, as well as entrepreneurial shale companies in North Dakota and Texas, and major oil companies including ExxonMobil and Royal Dutch Shell. As traders anticipate the return of Iranian oil, the futures market is already lowering its expectations for prices next year, with contracts for December 2016 trading at less than $60 a barrel.

...and punishing your enemies.

Posted by at November 5, 2015 6:00 PM