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One of Rigzone’s regular market watchers takes a look at Iran’s oil production, the state of US crude stockpiles, OPEC’s plans, the price of oil and more. Read on for more details.
Rig zone: What were some market expectations that actually played out over the past week, and which expectations didn’t?
Barani Krishnan, Senior Commodity Analyst at uk.Investing.com: U.S. crude stockpiles fell for a third straight week in line with forecasts and OPEC continued to hint that it will also resort to an October production cut, although that message was delivered by the Russians rather than the Saudis
Rig zone: What were some market surprises?
Krishnan: What really took the cake this week was the revelation that Iranian oil production has been rising and rising over the past two years and now stood at 3.2 million barrels per day compared to a low of 2.4 millions of the Trump era.
The Iranians, given the chance, could upset the Saudi apple cart with oil prices. Iran’s all-time high was 4.8 million barrels per day in 2017, a year before Trump’s sanctions hit. There is no certainty, of course, that they will get there. To produce more oil, Iranians must invest more in drilling and infrastructure, and Tehran’s finances are still recovering from heavy damage from years of sanctions.
But $80 or more for Brent, compared to pandemic-era lows of $40 or less, is a bonanza for Iran and could help it scale production quickly. Also, at $90 or closer to $100 a barrel, Tehran could do what Russia did until recently: discount its own barrels by $20 or more. And waiting to seize them will be the same Chinese and Indian buyers who have stockpiled enough cheap Russian oil over the past year that they are slowly working through their inventory despite the tight global supply situation.
Rig zone: What news/trends will you be waiting for this week?
Krishnan: The Saudi obsession with $90 or more for a barrel of Brent, which settled above $88 on Friday, looked achievable. However, with Monday’s Labor Day holiday signaling the start of the seasonally low fall season for oil consumption, there may be some rebound in prices before the market moves too far.
To contact the author, please send an email andreas.exarcheas@rigzone.com
