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Iran nuclear deal: oil winners and losers

Published Friday, July 24th, 2015

With the P5+1 and Iran having put pen to paper on a historic nuclear agreement it is time to take stock to see who will ultimately benefit from the deal and which parties are set to be worse off. As Tehran makes its return to the global political stage and shakes off its label of pariah state, it has been quick to make wildly optimistic estimates in the expected increase of it crude oil exports. Current predictions that it will double oil sales abroad to 2 mbpd within six months of sanction relief have been largely dismissed but the prospect of an additional 400-500,000 bpd to what is already forecast to be a heavily-oversupplied 1Q 2016 is very real.

That is not to say that extra Iranian barrels will not make their way onto international oil markets in the interim period with a combined 40 million bbls of crude and condensate said to be stored offshore ready to be released to hungry buyers. This has already been evidenced in the short time since the accord was signed after one of Iran’s many supertankers holding stored oil set sail for Asia just last week.

Winners

The foremost group that stands to benefit from what will undoubtedly be an extended period of depressed oil prices are oil-consuming countries and predominately those in Europe and Asia. Recent events have shown that austerity is still very much in play across the eurozone and subdued energy prices will act as a boon for governments and consumers alike. Refiners represent another significant winner in the looming increase of Iranian crude oil exports with the costs of their inputs coming under further pressure which in turn will support their razor-thin product margins. Anticipation of easing sanctions has already prompted Asian refiners, who saw their imports of Iranian crude reach a 2015-high of 1.2 mbpd in May, to signal their desire to purchase more of its oil as refinery activity across the region increases.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.