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Y'all ready for sub $1.50 gas prices and a recession? Iran is back in the Oil Game!

Discussion in 'BBS Hangout' started by Xerobull, Nov 9, 2015.

  1. Xerobull

    Xerobull You son of a b!tch! I'm in!

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    Iranian oil is back in the game. Their only goal? Regain their market share. Sale sale sale!

    Iranian Oil Goes Back on the Market

    After years of sanctions, the country is boosting production and aiming to win customers back from the Saudis and Russians.

    [​IMG]


    The fate of the oil market in 2016 depends in large part on a series of oil fields with names such as Ahwaz, Gachsaran, Bibi Hakimeh, and Darkhovin. All of them are pumping crude buried thousands of feet under the hills of the Zagros mountain range in western Iran. Since mid-2012 the fields have been producing far below their capacity because of U.S. and European sanctions limiting Iranian oil exports. Now that Tehran has reached a deal with the Western powers to resolve the dispute over the country’s nuclear program, Iranian engineers are working to bring the fields back to full production.

    “Immediately after lifting sanctions, it’s our right to return to the level of production we historically had,” Iran Oil Minister Bijan Namdar Zanganeh said in September, weeks before the first international oil conference held in years in Tehran.

    The country’s return to the oil market comes as the world is producing much more oil than it needs. According to the International Energy Agency (IEA), global oil production in the first half of 2015 averaged 95.7 million barrels a day, while average daily consumption came in at only 93.8 million barrels. The difference of almost 2 million barrels a day—equal to the daily consumption of France—has forced traders to turn supertankers into floating storage facilities.

    The Iranians had to make a similar move when sanctions hit in 2012, converting their extensive fleet of crude tankers into giant storage bins that have spent much of the past three years anchored in the Persian Gulf.
    More Iranian oil on the market in 2016 will extend the oversupply. The impact will reverberate across the world, hurting oil-producing countries such as Russia, Saudi Arabia, and Venezuela, as well as entrepreneurial shale companies in North Dakota and Texas, and major oil companies including ExxonMobil and Royal Dutch Shell. As traders anticipate the return of Iranian oil, the futures market is already lowering its expectations for prices next year, with contracts for December 2016 trading at less than $60 a barrel.

    Zanganeh has repeatedly said Tehran would increase its production by 1 million barrels a day within weeks of the end of the sanctions, expected to be lifted sometime during the first half of 2016. The IEA estimates that within six months of sanctions ending, Tehran could bring daily production to 3.6 million barrels—or about 800,000 barrels a day above current production. That would mark Iran’s highest level of crude output since 2011.

    Oil traders and analysts are far more conservative about the country’s ability to quickly increase production. “We believe the potential removal of Iranian sanctions could provide strong conditions for a recovery in oil production, but we do not share the optimism expressed by some market commentators on the speed of the production turnaround,” says Ildar Davletshin, an analyst at Renaissance Capital in London.

    Iran could surprise the pessimists. Oil-dependent countries have a history of recovering production faster than anticipated after disruptions. In 2003, Venezuela’s state-owned Petróleos de Venezuela was able to lift output by 2 million barrels a day in only four months despite widespread damage to equipment resulting from an attempted coup against President Hugo Chávez. In 2011, after civil war broke out in Libya and the country’s oil production fell to zero, the market widely expected it to take 18 months to raise output by 1 million barrels a day. Production surpassed that level in less than six months.
    Whatever Iran is able to produce next year, much of its crude could end up in Southern Europe, as Iran aims to regain customers it lost in France, Italy, and Greece. After sanctions forced European countries to stop buying from Iran, Southern Europe turned to Saudi Arabia, Russia, and Iraq as its main suppliers. Analysts say that to take back market share, Iran will have to offer customers cheaper crude than the Saudis and Russians.

    Another unknown is the amount of oil Iran has in storage, both inland and in supertankers in the Persian Gulf. Estimates range from about 12 million barrels to 60 million barrels. The exact composition of what’s in storage is also unknown: Crude oil, fuel oil, and so-called condensate (a form of high-quality crude) are all possible.

    Regardless of the final increase, Zanganeh, Iran’s oil minister, has a message to the rest of the energy world: “Our only responsibility here is attaining our lost share of the market, not protecting prices.”

    [​IMG]
     
  2. Outlier

    Outlier Member

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    So this is bad news for oil and gas companies and means more layoffs, huh? Dang.
     
  3. DaDakota

    DaDakota If you want to know, just ask!

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    Another good reason to convert to alternative fuels sooner than later.

    DD
     
  4. Dubious

    Dubious Contributing Member

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    gasoline prices are as much a function of refining supply and demand as crude prices. cars are getting ever more efficient and a couple of giant refineries have recently come on line.
     
  5. ROXTXIA

    ROXTXIA Contributing Member

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    Glad I found my way into a software company. Oil and gas industry not really looking for technical writers anymore, that's certain.
     
  6. peleincubus

    peleincubus Member

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    so when gas was a $1 in the late 90's it caused a recession?
     
  7. Tenchi

    Tenchi Contributing Member

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    The recession comment is most likely just about Houston and the surrounding area. Should be great for everywhere else.
     
  8. FTW Rockets FTW

    FTW Rockets FTW Contributing Member

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    Oh well. I'm not ready to lose my job.

    Situation could get ugly in Houston
     
  9. Air Langhi

    Air Langhi Contributing Member

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    With cheap oil why will anyone want to do that?
     
  10. Mr. Brightside

    Mr. Brightside Contributing Member

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    Lower gas prices can only add to US GDP. On a local scale, a downturn wouldn't be that bad as it will effectively trim the fat of bloated oil and gas companies. The companies will be able to run more efficient operations in the future as there are many redundant jobs in this field. This will further help make Houston housing more affordable to the masses which is a net positive.
     
  11. Air Langhi

    Air Langhi Contributing Member

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    The auto industry is booking so is the air line industry.
     
  12. ClutchCity3

    ClutchCity3 Member

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    R.I.P the Canadian economy.
     
  13. REEKO_HTOWN

    REEKO_HTOWN I'm Rich Biiiiaaatch!

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    Another nail in Putin's coffin
     
  14. LCAhmed

    LCAhmed Contributing Member

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    What will happen to Houston's economy? It's bad enough as it is right now with the NASA cutbacks and gas prices today.
     
  15. Dubious

    Dubious Contributing Member

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    Chemical refining is the hedge for oil prices, it softens the blow here.
    Medical services are booming.
    The private space industry is in it's infancy.
     
  16. Mr. Clutch

    Mr. Clutch Contributing Member

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    I don't think this is new information
     
  17. Air Langhi

    Air Langhi Contributing Member

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    Chemical Refining Margins < Upstream Margins.
     
  18. leroy

    leroy Contributing Member

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    I don't think the economy in Houston is doing all that poorly. Yes, it will hurt if there are further cuts but the economy here is diverse enough to get through it.
     
  19. Blake

    Blake Contributing Member

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    except for all the sellers of the houses and the people who are looking for jobs in Houston...
     
  20. HR Dept

    HR Dept Contributing Member

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    I've been saying this since the the other "Houston Oil Boom is Over" thread. It's like no one at all is listening. Those huge complexes east of town, they're called chemical plants and refineries. And they're killing it right now.
     
    dachuda86 likes this.

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