Iran's oil stockpile could flood market.

Iran has been stockpiling oil in the hopes that sanctions will be removed. My question is will it lower prices up to a third by some estimates?Or will it be the trigger for Saudi Arabia to increase production? Regardless it's a pretty good demonstration on how intricately interwoven our world is. Even a move to stop a nuclear arms race in the gulf, could hide intentions.

If it lowers oil prices farther. (Bad for Russia)

If Saudi Arabia cannot stand oil prices being cut by a third and amps up their production levels. (Bad for everyone else except big oil)




So as usual with any solution it's just another no-win situation for someone in this world.

Bloomberg news agency has been compiling data which show that the OPEC country has been stockpiling oil both onshore and in supertankers in the Persian Gulf. Even though estimates by government officials and shipbrokers vary regarding the extent of the hoard- anywhere in the range of 7 million to 35 million barrels- Bloomberg cites Barclays and Societe Generale SA as forecasting that this oil would be first to be exported abroad if a deal is reached between the P5+1 and Iran.


"North America continues to put a million barrels a day of 'excess' oil into storage. Iran may add, abruptly, an additional 0.8 million barrels of additional oil into the system. If prices are struggling with the North American "excess", what will prices do when the system tries to accommodate an added quantity of a similar magnitude?"

"The perspective that I visualize is similar to the panic that ensues when I see the commode overflowing!"

Iran's oil could flood the market

Capitalism would say that the price will drop and weak companies should fail, market adjusts, etc... (hopefully we get that XL pipeline approved since oil is soooo expensive)

That said I live in the USA and we got quite upset when OPEC said they wouldn't do our price fixing anymore as it was losing them market share. Maybe we can fund a small war with the intent of destroying the Iranian oil reserves.

I guess talk about oil makes me grumpy... :/

a reply to: Elton

I'm in the US too. And not for a moment since the Saudi Arabians cut production did I think it had anything to do about price-fixing. That was a move to throttle the Russians only.

Which brings to mind another question, will Russia apply pressure to keep Iran from lowering the price in the market, or do they have another plan altogether?

a reply to: Greathouse

For years they would cut production annually to artificially keep the price of oil high even though they lost market share by doing it. They stopped doing that.

The timing was during the increased US exporting of shale oil and the proposed XL pipeline was being debated... I guess I'm connecting dots here, but it makes perfect sense to me.
businessinsider.com

I don't think Iran's stockpile of Oil will massively impact Oil prices. A couple dollars or so drop. Possibly the initial scare of it could bring prices down lower but Iran is still selling lots of Oil right now despite sanctions.

Good topic to watch thou! Especially if you're an Oil trader!

a reply to: Greathouse
I think Iran is trying to offset our efforts to undermine Russias energy industry. WE lowered oil prices already world wide through negotiations and back door dealing. Iran would not HELP us do that. They will hold onto their oil as long as they can because Russia is working with them in other areas and they kind of need to keep Russia happy.

IF the price goes any lower the Russian economy will implode. Putin cant just keep buying up failing Russian industries to compensate for our efforts.

IMO, we should sit back and wait to see what happens. Our allies that hold oil reserves can hold out a LONG time earning less for their oil. We can deal with making a few bucks less at home. I think we hiked up prices beforehand for a couple years to give the oil industry we are aligned with some breathing time. Those record profits will last them for a couple decades before they need to change a single aspect of "business as usual".

a reply to: Elton

Quite familiar with the story that it was too bust US shale production. If you preferred to believe that go ahead. But the greatest impact reduced prices have had on any country in the world is in Russia. Also I do not ever recall the price for oil being adjusted by 47% .

a reply to: Greathouse

Just my opinion based on the news I've read regarding oil.

If you have different information that would change what I think, I'd love to read it.

a reply to: tadaman

Honestly I would also think that Iran would follow Russia's Lead. But why are they stockpiling oil in supertankers , if not to get it to market quickly?

a reply to: Greathouse

I dont know. My first guess is that they hoped to have it sold already. I imagine they are in a whirlwind of promises from China and Russia. Time will tell if those two will even need Irans oil. Plans change.

They could just have a problem with storage. They arent exactly geared for stockpiling what they usually would have sold off each year.

They could just have a logistics nightmare trying to deal with all the excess they have all of a sudden.

a reply to: Elton

I could link you to someone's blog or some stupid YouTube video. ( must be true if it is on YouTube) lol

But I don't trust either source that was just my personal opinion. A call I made at the very beginning when Saudi Arabia refused to lower production.

But I would really like to stay on topic. What kind of impact would it be if Iran released anywhere from 7 million two 35 million barrels on to the market?

a reply to: tadaman

I ran has been selling oil to China for quite a while.

Only six buyers are still allowed to take crude from Iran - - China, India, Japan, South Korea, Turkey and Taiwan -- down from 21 before the restrictions went into effect in mid-2012.

Iran's current oil exports

The stockpile they have been building up in recent weeks is for the western oil market if sanctions are removed. I mean they are stockpiling it on supertankers if they could ship it off to countries they already export with why stockpile? The estimates on Iran's current oil production is .08 million barrels per day. ( in original source)

It just doesn't make any sense to me.

originally posted by: Greathouse
The stockpile they have been building up in recent weeks is for the western oil market if sanctions are removed. I mean they are stockpiling it on supertankers if they could ship it off to countries they already export with why stockpile? The estimates on Iran's current oil production is .08 million barrels per day. ( in original source)
It just doesn't make any sense to me.

I think after so many years of negotiating Iran knows exactly what the West wants before they will lift Sanctions. They filled up as many boats as they could find because they are going to sign a deal and that gets the Oil money flowing as fast as possible.

Good News! A deal so Iran doesn't build Nukes is just around the corner! They will only hover so close they could do it anytime they want.

originally posted by: tadaman
They could just have a problem with storage. They arent exactly geared for stockpiling what they usually would have sold off each year.

I'm pretty sure they maxed out their storage capacity many many moons ago. You're bang on, they can't store all that much.

a reply to: noeltrotsky

I can see that reasoning except there is a glut of oil at the moment the US is also stockpiling oil. Now maybe Iran could be using the threat of nuclear weapons to get a better price for that oil?

originally posted by: Greathouse
a reply to: noeltrotsky

I can see that reasoning except there is a glut of oil at the moment the US is also stockpiling oil. Now maybe Iran could be using the threat of nuclear weapons to get a better price for that oil?

I'm gonna just go with the simple reason....money! They don't care what the price is. They have it coming out their arse and they need more money. If I was them I'd pump it and sell it too. Clearly I have a spending problem!

a reply to: noeltrotsky

If we see them release it gradually on the market it was solely for money. If they flood the market my question is why would they intentionally lose up to a third of its value?

a reply to: Elton

There are no small wars.

It may worth a tread on its own if you consider this as a 'sign' that Iran is about to open itself broader to the world :

Iranian bank joins SWIFT breaking blockade

Iran's Day Bank has announced joining the SWIFT transaction system, which facilitates worldwide bank transfers. The private system cut off Iranian financial institutions in 2012 amid a US-led campaign to cripple the country's economy.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) blocked 30 Iranian banks from its services after the EU joined American sanctions against the Iranian banking sector.

Now the financial blockade appears to be crumbling, as Day Bank governor Ahmad Shafizadeh announced joining the system after a lengthy campaign, the Iran News Daily reported.

This will certainly accelerate any form of trade if the sanctions are lifted after the nuclear deal is reached.

Oil is a byproduct of the eaeth.
just so happens that someone realised it can be used for other things. It's just a shame that people put such a pricetag on it and then wiped alternative energy sources from the field because profit couldn't be achieved.

Imagine if oil wasn't removed.......maybe we'd be knee deep.