EODE/ 2016 08 21/
GEOPOLITICS/ with Forbes/
« Getting teach by the enemy is a duty and an honor »
– General Haushofer, German geopolitician
(father of the concept of « continental Bloc »).
* FG Energy chairman Fereidun Fesharaki said: “Iran was the second largest OPEC exporter and important. With sanctions, it lost money and became irrelevant. It becomes relevant again and becomes now number three after the Iraqis.”
* Iran continued its OPEC defiance on Tuesday (2016 08 16), dampening hopes of a production cut next month.
Iran is trying to make a comeback after years of crushing economic and financial sanctions placed against its energy sector by Western powers over Tehran’s nuclear ambitions.
Further complicating the issue, some analysts claim that the ongoing rivalry between Iran and Saudi Arabia will also keep Iran from agreeing to production cuts any time soon. Iran and Saudi Arabia are on opposing sides of a more than 1,000-year old argument at the heart of Islam – disagreements between Sunnis and Shia. This animosity has led to a power struggle in the Middle East and beyond.
PRESS REVIEW/ FORBES:
PRICKLY IRAN DEFIES, THEN KEEPS OPEC GUESSING
“Iran is trying to make a comeback after years of crushing economic and financial sanctions placed against its energy sector by Western powers over Tehran’s nuclear ambitions. In January, Iran’s deal with the so-called P5+1 (the U.S., U.K., France, Germany, Russia and China) came into effect, effectively reopening international markets to hundreds of thousands of barrels of Iranian oil and returning billions of dollars in frozen oil money to Iran. However, the lifting of sanctions came at an adverse time for global oil markets which have been over supplied for more than two years mostly due to U.S. shale oil production. Prices have trended downward from $107 per barrel in July 2014 to current prices averaging in the low to mid-$40s per barrel range.
Iran also pledged in January to ramp up production to pre-sanction levels – a promise it’s making good on. UBS analysts Giovanni Staunovo and Dominic Schnider said at the time that “the likely increase of Iranian oil production could not have come at a more unfavorable point in time with the oil market oversupplied amid renewed economic concerns (particularly related to China) darkening the outlook for oil demand growth.” FG Energy chairman Fereidun Fesharaki said: “Iran was the second largest OPEC exporter and important. With sanctions, it lost money and became irrelevant. It becomes relevant again and becomes now number three after the Iraqis.”
The Islamic Republic is also battling OPEC de facto leader Saudi Arabia for oil market share not only in Europe but also in Asia which has the world’s second and third largest oil importing countries, China and Japan, respectively.
PRODUCTION LEVELS NOT MET YET, SAYS IRAN
Iran continued its OPEC defiance on Tuesday, dampening hopes of a production cut next month when the 14-nation oil producing cartel meets in Algiers. Iran said that its production will not have risen to the levels the country needs to justify cooperation with its rivals, adding that it hasn’t yet made a decision whether or not it will attend the Algiers meeting.
However, we have been here before. In February, less than a month after sanctions were lifted, Iran refused production cut backs after Qatar, Saudi Arabia, Russia and Venezuela pledged to freeze output at January levels. If Iran doesn’t agree to cut production, other OPEC members have also refused to cut production as well – effectively allowing Iran to play the spoiler within both OPEC and in global oil markets. “Iran has to be there or there will be no freeze,” an OPEC delegate said recently.
According to OPEC’s most recent monthly report, Iran’s oil production stood at 3.629 million barrels per day (bpd) in July, a 12,000-barrel increase compared to the preceding month. However, Iran’s production is still short of pre-sanction levels of 4 million bpd, adding credence and justification to Tehran’s refusal to agree to a production cut.
* See on FORBES:
Prickly Iran Defies, Then Keeps OPEC Guessing
Pic: Iran’s Minister of Petroleum Bijan Zangeneh (bottom L) attends the 169th meeting of the Organization of the Petroleum Exporting Countries, OPEC, at OPEC headquarters in Vienna, on June 2, 2016. / AFP / JOE KLAMAR / Getty Images
EODE / GEOPOLITICS