Oil Price: dynamics of the crude market with Iran back to the fold

 

Iranian Oil

Although the hardliners of the Iranian administration are determined not to revive the nuclear deal signed in 2015, the moderates, led by President Rouhani, appear to be getting their way.

On the part of the US administration, the indications are that they will do everything to revive the deal even if that means caving into some of Iranian demands, if not all.

The bone of contention will be over how to compensate for the loss of revenue by Iran due to crippling sanction imposed by the Trump administration.

A plane load of cash this time, however, as it happened in 2015, will not be political candy that can sell very well to the American domestic audience regardless of the political affiliations.

As far as Iranian oil industry is concerned, the moves are underway in hope that sanctions will be lifted in the near future. By reading between the lines of their official communiques, both the US, European Union and other stake holders are keen on getting Iran back to the fold; the Uranium enrichment, however, is going to be the main sticking point.

When Iran is back in full swing, it is going to alter the dynamics of the crude oil market. Since it is in dire need of petro-cash, for how long that the Iranians will stick to self-imposed production cuts exactly as other members do, as a member of the OPEC+ remains to be seen.

Most Middle Eastern analysts believe that Iran will increase its production even if it will not go down very with its regional rival, Saudi Arabia.

At present, Iran is exempt from large production cuts as it is still under the US sanctions.

In the next two weeks, two events are going to be the key factors that determine the oil price: the OPEC+ meeting on March 4 and the progress made in Iranian nuclear deal involving the West and Iran; oil price that defied the usual influential factors, may certainly respond to these events.

Iran is a country with significant oil and gas reserves that will last decades to come at the current rate of production. Iran will carefully play its cards while keeping its focus on ground realities – with a bit of rhetoric for the domestic audience.

 

 

 

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