To put Iran’s recent production increases in perspective: On its own, for 37 years, Iran has struggled to produce two-thirds of its pre-revolutionary level of 6 million barrels/day. Now, domestic opposition is again limiting foreign oil companies’ participation to boost production.
Since the Obama-administration’s and Europe’s nuclear sanctions were lifted early this year (marked ‘e’ on the chart), Iran has been expanding its production and exports more rapidly than most experts had expected. Tehran has actually tripled exports since late-2015 (see point ‘f’). But, here’s the big question: Can Iran sustain this years’ production gains?
If to, this could seriously undermine Saudi Arabia’s global oil-market share, and boost Iran’s sanctions-damaged economy to a long-awaited recovery.
The short answer: Now that foreign sanctions are finally lifted, the battle to boost Iran’s oil exports has shifted to a domestic clash over whether to allow foreign oil companies to have significant upstream involvement. This is a domestic Iranian issue with a long history.
Let’s start with some historical perspective: The Iranian National Oil Company (NIOC) can only do so much on its own to boost production. After decades of sanctions, it lacks the needed technology and finance. I told CNNMoney
‘s Matt Egan, on Wednesday, that the faster Iran expands on its own,
the faster production will plateau. (His CNNMoney article
today quotes me .).
This was what happened after the 1980-1988 Iran-Iraq war.(‘b’ on the chart). By about 1992, production had plateaued at almost 4 million barrels/day, under 2/3 of the pre-revolutionary, late-1970’s level of roughly 6 million barrels per day. (‘a’ on chart). The Iranian president at the time, Rafsanjani, argued to religious conservative and nationalist members of the Majilis that only foreign oil companies’ technology and investments could expand production further. However, he only won grudging approval for an offshore project due to fears that foreigners would bring their irreligious ways ashore and/or undermine the hard-won nationalization of Iran’s oil sector.
Posted in Chavez, Chavez lagacy, Chavez legacy, Energy and Geopolitics, Faja of the Orinoco, Global Oil Market, heavy oil, Iran, Iran nuclear, Iran sanctions, Obama, oil, Oil prices, Oil supply, OPEC, Sanctions, Saudi Arabia, shale oil, The USA, U.S. oil, Uncategorized, Venezuela oil
Tagged geopolitics, Heavy crude oil, Hugo Chávez, Iran, Obama, OPEC, Saudi Arabia, United States, Venezuela
Last night Investor’s Business Daily NEWS’ Gillin Rich interviewed me. The title reflects some rumors, but my point of view, as she reports, emphasizes market realities that bode against any output limit – esp. if the Iranians are still intransigent … and … Continue reading
I was interviewed today by CNNMoney’s Matt Egan on what OPEC should expect from US shale as they hold their 169th “Ordinary Meeting” in Vienna tomorrow (2 June). Indeed, at some point oil production and demand will balance (likely in 2017), and then the Saudis and OPEC will have to cautiously test the presently unknown dynamics of high-tech US shale on the rebound. -Egan cites my point of view in his article. Read on … – Tom O’D.
Don’t bet against the resilience of U.S. oil companies
by Matt Egan @mattmegan5 CNNMoney (New York) June 1, 2016: 12:23 PM ET
Many expected U.S. oil output would collapse under the weight of a lengthy price war with the mighty OPEC, the fractured oil cartel that’s meeting in Vienna Thursday.
The U.S. oil boom, fueled by the shale revolution, has obviously taken a few punches from OPEC’s strategy of all-out pumping. But the latest numbers show that American production continues to remain stubbornly high in recent months despite the crash in crude to as low as $26 a barrel in February.
The U.S. pumped 9.13 million barrels per day in March, down by a miniscule 6,000 barrels from the prior month, according to stats released this week by the U.S. Energy Information Administration. That represents a deceleration from recent monthly declines. By comparison, daily U.S. output dropped by 58,000 barrels in February and by 83,000 barrels in December.
Posted in Energy and Geopolitics, Global Oil Market, Global Oil system, High technology, Oil prices, Oil supply, OPEC, Saudi Arabia, shale oil, The USA, Tight oil, U.S. oil, Uncategorized
Tagged Ali Al-Naimi, Heavy crude oil, oil market, oil price, OPEC, Petróleos de Venezuela, Saudi Arabia, shale oil, Technology, United States, us shale, USA
This Wikistrat Report on the Saudi kingdom’s “reform” plans and the future of oil is from a press webinar I did on 17 May together with Dr. Ariel Cohen (Atlantic Council, Washington) and Prof. Shaul Mishal (Middle East Division, IDC Herzliya & Tel Aviv U.). A nicely done report on oil market and geopolitical hot topics.
30May16 note: A couple typos I had found have been fixed by Wikistrat since I initially posted this Report. The latest version is now linked here. – T.O’D.
Posted in AICGS, Energy and Geopolitics, Energy and Geostrategy, Enhanced oil production, Global Oil Market, Global Oil system, international relations, Iran nuclear, Iraqi oil, Obama, Oil prices, Oil supply, OPEC, Persian Gulf, Russia, Saudi Arabia, shale oil, The USA, Tight oil, U.S. oil, Uncategorized, Venezuela oil
Tagged Ali Al-Naimi, Energy, geopolitics, Iran, Iraq, Obama, oil sector, OPEC, Persian Gulf, Saudi Arabia, United States, Washington
Oil ministers of Venezuela, Saudi Arabia & Qatar had agreed in February to freeze output if others did too. AFP/Getty Images
After a Wikistrat Webinar I did, MarketWatch asked me about Saudi & OPEC policy, ond US Shale. Read on here, or at MarketWactch! – Tom O’D.
5 key issues OPEC must wrestle with at its June meeting
Oil output freeze is needed to ‘create a firm price floor’: analyst
The oil market has given members of the Organization of the Petroleum Exporting Countries a reason to crack a cautious smile when they meet June 2 in Vienna.
Signs of a more stable oil market have emerged since the cartel members last held a regularly-scheduled meeting. Oil prices CLN6, +0.04% LCON6, -0.38% have gained more than 30% so far this year. And both West Texas Intermediate, the U.S. benchmark, and Brent crude, the global benchmark, briefly traded above $50 on Thursday.
Global production is falling following a larger-than-expected weekly decline in crude supplies, according to a report from the American Petroleum Institute late Tuesday. The report comes as the number of active-drilling rigs have been in a steady state of decline and oil-company spending cuts, oil-and-gas sector bankruptcies, and recent outages in Africa and North America, have been supportive for crude prices.
“OPEC members are likely to be a little happier going into June’s meeting than they were in December,” Tom Pugh, commodities economist at Capital Economics, said in recent research note.
Oil prices have “surged by about a third since the start of the year,” he said. The “higher prices will have removed some of the pressure on [OPEC] to act to prop up prices.”
But that doesn’t mean major oil producers can sit back and relax when they get together. Oil market supply and demand haven’t fully stabilized and there a lot of factors than can, and probably will, rock OPEC’s boat.
Here’s a rundown of what analysts see as the key issues at hand and possible outcomes for the OPEC summit: Continue reading
Posted in AICGS, Energy and Geopolitics, Energy and Geostrategy, Global Oil Market, Global Oil system, international relations, Oil prices, Oil supply, OPEC, PDVSA, Saudi Arabia, shale oil, The USA, Tight oil, U.S. oil, Uncategorized, Venezuela oil
Tagged Energy, geopolitics, OPEC, PDVSA, Saudi Arabia, United States
Merkel and Obama at G7. Main topic was Russian threats to EU and Ukraine
An AICGS workshop with Dr. Thomas O’Donnell was held on May 27 in Washington, DC with a lively full-room attendance.
O’Donnell presented preliminary results of interviews he conducted in Washington during April and May to hear candid views of US energy-and-geopolitical experts on German and the EU energy policies. The main topics were (1) European natural-gas vulnerabilities in light of the Ukraine crisis and dependence on Russian supplies and (2) implications of Germany’s commitment to a transition to renewable energy called the Energiewende. Continue for Workshop PowerPoint & written Summary –> Continue reading
Posted in AICGS, Alternative energy, Energiewende, Energy and Environment, Energy and Geopolitics, Energy and Geostrategy, Euroepen Union, European Union, Gas globalization, Germany, Global Oil Market, Global Oil system, international relations, LNG, shale gas, shale oil, The USA, Tight oil, U.S. oil, Ukraine, unconventional energy
Tagged Berlin, Business and Economy, China, Energy, European Union, geopolitics, Germany, natural gas, OPEC, Thomas O'Donnell, United States, Washington
German Chancellor Merkel listens to Russian President Putin [Photo: dw.de 29.4.14]
Throughout April and May I’m researching US Expert Perspectives on German [and EU] Energy Vulnerabilities
– as a visiting fellow of the American Institute for Contemporary German Studies
(AICGS) in Washington, DC, funded by the German DAAD
. You can read the proposal below. But, first, I’d like to ask Global Barrel readers for two things:
(1) Is there anyone you feel I should interview here in Washington–the idea is to interview US energy experts, government officials and business people?
(2) What is your opinion of German and EU energy policies and their geopolitical implications. This includes issues ranging from German/EU dependence on Russian gas, the Ukraine and Turkey as gas-transit states, the new European “Energy Union,” the German Energiewende, and more—no matter on which side of the Atlantic you live.
[I’ve deleted the names of people I propose to interview, as not all will agree to have their remarks made public. I’m happy to keep opinions private and use them in general summaries of my findings.]
Posted in Energiewende, Energy and Environment, Energy and Geopolitics, Energy and Geostrategy, Euroepen Union, Germany, Global Oil Market, international relations, LNG, Putin, Resource conflicts, Russia, Sanctions, shale gas, The USA, U.S. oil, Ukraine, Uncategorized
Tagged Energiewende, Energy, Energy security, European Union, geopolitics, Germany, natural gas, USA