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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIs this what Saudi Arabia's oil moves are really about? Iran sanctions lifted: Brace for oil shakeup
U.S. and European Union sanctions on Tehran were finally lifted on Saturday, restoring Iran's access to world's markets. Iran has been gearing up for this moment for months and could soon return to the top ranks of global oil producers.
Crude prices have been tanking for months, dropping to below $30 a barrel. A flood of new oil from Iran will likely push them even lower very soon.
"Iran is able quickly to pull oil out of storage and from tankers floating at sea ... which it has an interest to do soon, since it is paying to store that oil," said Brenda Shaffer, a professor at Georgetown University in Washington, D.C.
Analysts expect Iran to add between 600,000 and one million barrels per day to its oil output, but the country's leaders are much more bullish.
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http://money.cnn.com/2016/01/16/investing/iran-sanctions-lift-oil/index.html
Are the low prices and over-production by Saudi Arabia really about Iran entering the market and not the US?
EdwardBernays
(3,343 posts)And SA is not in control of it any more.
daleo
(21,317 posts)So, they can't last for all that long. The Saudis can't supply the entire world with cheap oil - it's just not physically or geologically possible.
Plus, Saudi Aramco may be able to produce profitably at 20 to 30 bucks a barrel, but the Saudi state needs 60 to 80 bucks to cover its budget. If they try reducing their government expenditures by very much, they risk social unrest and overthrow. They can live off their savings for a while, but that is not a sustainable strategy.
Their recent oil moves could be another chapter in Barbara Tuchman's well known book, The March of Folly. But, that's what can happen when a pampered insular monarchy makes state policy.
Amishman
(5,557 posts)The Saudis have lost control since they cannot afford to cut capacity due to budget constraints and there is enough non-opec capacity now that opec cannot set the price. even if almost all US shale oil shuts down, it can quickly come back on line as soon as prices go back above $60 or so. The Saudis have lost control and have no good options, so they are treading water and hoping for something external to save them.
Gregorian
(23,867 posts)We've got tankers just floating around the seas with oil, going nowhere, from what I'm hearing.
bemildred
(90,061 posts)roamer65
(36,745 posts)Payback time is here.