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Petrostate Problems
U.S.-Iran Deal Could Sink Russia
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  • Nevis07

    I’m not sure how I feel about any deal with Iran, but just doing a quick search, Iran has a production cost of $10-15 a barrel. If you add 800k – 1M additional barrels to the market prices would definitely drop quickly, but I don’t know if they would go much lower than $25 and maybe a stabilized price around $35?? At that point, the cost of production on average might be too low for Russia and for Venezuela creating a natural floor in prices. Beyond the price it would simply lengthen the time for excess supply to be mopped up. One way or another, shale has permanently changed the economics (and politics) of oil. Petrostates might not be able to hold the world hostage anymore. The medium term price of oil continues to go down, I’m guessing somewhere in the $65 barrel range.

    • Kevin

      Remember countries like Russia or Venezeula can reduce their costs (to some extent) by devaluing their currency – and US costs will rise relative to others as the dollar strengthens.

      • Mahound

        I don’t think Obama sees that as a problem. He can punish both the Russians and those pesky fly-over-state Americans that keep on clinging to their Christian religion and legal guns.

        If only the American people could turn off their New York-produced news channels and then start to understand that the American and Russian peoples are united against the same enemy.

  • Pete

    Things sure get complicated fast.

  • Fat_Man

    It only works if the Iranians do not use their now unchecked dominance of the Middle East to cut off the straights of Hormuz and keep Saudi oil off world markets. And, who is going to stop them?



  • danram

    Iran is playing Obama for a sucker, just like everyone else. They have no intention whatsoever of giving up their nuclear weapons program. They’re just stringing Obama along because they know that he’s desperate to accomplish something … anything .,.. that will make his presidency be remembered for something other than an 8-year train wreck.

  • kalendjay

    Iranian oil is not relevant to the current nuclear negotiations. The US has banned Iranian imports since the 80’s, and investment climate, as Statoil had learned in the last decade, is more critical than the current, pitifully low production. Iran is a lousy place to do business, notwithstanding no apparent restrictions of purchases by China, or of reexport from the glut of Chinese refineries to far eastern neighbors.

    More relevant is the viability of southern Iraq, and the degree of control Iran exerts over the government there, which is flooding oil supplies after a long period of dormancy under the US occupation. This means that the US and the world will have to confront oil exports via Iran(as under Saddam) as well as financial oversight of the process under Iran, Qatar, and other accolytes.

    Sloppy article, Walter.

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