Link for the curious: http://www.bloomberg.com/gadfly/articles/2016-04-24/iran-might-spoil-saudi-arabia-oil-plan
Since the sanctions on oil sales was lifted for Iran in January, their sales and exports of oil have absolutely taken off. If the exports continue at this rate, there could be some major discussion at OPEC's next meeting in June. From March to April, Iran's oil exports increased from 1.45 to 2 million barrels per day, a staggering increase which shows Iran is here to play.
Iran refused to participate in the output freeze early on in the year because they wanted to restore their exports to pre-sanctions levels. The original estimate was that this process would take up to a year or more. However, it appears it's been done in just 3 months. This complicates the Saudi situation as they will have to make a choice at the upcoming OPEC meeting as to whether or not they will work in an output freeze or not.
It will definitely be interesting to keep an eye on Iran's production for the months of May and June and to see the results of OPEC's June meeting.
I thought that this article was a very interesting read. It was interesting to see that they could increase their output of oil from 1.45 million to 2 million. I have a strong feeling that OPEC is going to put restrictions on them when they meet June. im not sure if putting a restriction will be a good thing for the gas prices for the consumer, this may make them increase.
ReplyDeleteOdd to see that Iran didn't partake in the output freeze, but I guess it makes sense since they wanted to restore their exports. Looking at the graph in the article, Iran has really increased their amount produced, almost to 3.6 million barrels a year. It will be very interesting to see what will happen in the next OPEC meeting.
ReplyDeleteI do not believe that Iran made the right move by not freezing their output. I would assume allowing prices to rise again would be beneficial for them and all of OPEC in the long run. Could you please elaborate on the "Saudi situation"?
ReplyDeleteI read an article in The Economist earlier about Saudi Arabia's expectation to this and how it will affect what OPEC does. Saudi Arabia's Oil Minister said that they were not concerned with prices were barrel and it does not affect them. That's a pretty questionable statement but it will be interesting to see the influence the Saudi's have.
ReplyDeleteit is interesting to see how Iran has increased their amount of oil barrels produced per year. if they continue to grow and increase production, OPEC might be forced to put some kind of restriction on them.
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