jueves, 21 de abril de 2016

jueves, abril 21, 2016

Iran and Oil: You Ain’t Seen Nothing Yet

Iran’s feared return to the oil market has been underwhelming, but just wait

By Spencer Jakab

Iran's oil minister Bijan Zangeneh predicted that the nation’s exports will reach 4 million barrels a day by next March.
Iran's oil minister Bijan Zangeneh predicted that the nation’s exports will reach 4 million barrels a day by next March. Photo: Associated Press
 

“Freeze” is a word rarely heard in balmy Doha, but it will be the talk of the town this week.

That isn’t because a delegation from frigid Moscow plans an unusual appearance at a meeting of oil exporters being held in Qatar’s capital next Sunday. The star of the show, and quite possibly the spoiler, will be from nearby Iran.

Several large oil producers have pledged to freeze output at current levels if others do the same.

But Iran, recently freed from sanctions, is in the process of ramping up output and in no mood to stop.

A funny thing happened when restrictions were lifted on Iran, though: the market sold the rumor and bought the fact, as it were. Oil prices were under pressure at the prospect of Iran’s return but have bounced 50% over the past two months.



While such upside-down reactions aren’t unusual in some markets—bond yields acting oddly after Federal Reserve policy changes, for example—there is as much of a fundamental as a psychological basis in this case.

The number that everyone in the energy market has penciled in for Iran’s output, absent voluntary restraint, is 4 million barrels a day. That number stems from both the country’s presanctions peak and Iran’s stated ambition.

Whether it gets there and how quickly is a matter of disagreement. Iran’s oil minister Bijan Zangeneh said that for the one-month period ended April 19, exports would be some 2 million barrels a day. He also predicted that exports will have reached 4 million by next March.

The current export figures are an improvement but lower than expected. True, Iran’s fields and infrastructure are sorely in need of investment, and production can’t simply be switched on and off. But analysts thought the country had 30 million to 50 million barrels or more stored in a giant fleet of supertankers in mid-January.

Many of those tankers aren’t completely seaworthy, though, or lack proper insurance for voyages to European ports. There also have been reports of Saudi Arabia and Bahrain restricting port access to Iranian vessels.

A more significant problem according to Helima Croft, head of commodity strategy at RBC Capital Markets, is residual U.S. sanctions on dollar transactions. That has made Iran’s re-entry onto western markets difficult.

The upshot is that Iran’s slow start may have given false comfort to the rebounding oil market.

Some analysts think that the amount of Iranian crude stored on supertankers has even increased.

Betting that those barrels won’t show up at a refinery soon or that Iran will willingly cut short its return to the oil market would be naive.

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