Iran: The forbidden fruit (yet again) of the world market

The embers buried under the ashes left by last April’s failed Doha meeting are still sweltering and a slight gust would be enough to fuel a bonfire of cascading problems that could potentially wreak havoc on the global oil markets. The battlefield is OPEC and the feud sees the same old contenders: Saudi Arabia on one side and Iran on the other.

In April the world looked at the Doha OPEC conference with a mixture of hope and scepticism, in the hope that cartel members to would enact a production freeze to put a stop to the oil price drop, which plummeted in less than 2 years from a $115 high to a $27 all-time low in late January. Hope turned to scepticism when Saudi prince bin Salman declared that an agreement would be reached only through a unanimous green light from OPEC members, including Iran. Unfazed, Teheran simply did not go along with the Saudi proposal and refused to attend, publicly declaring its need to boost production up to pre-sanctions levels.

To this day, the oil market is still quite a turbulent and dynamic milieu, subject to destabilising factors, some hardly predictable. Just like the mammoth wildfires in Alberta that knocked out a whopping 1 million barrels a day in Canadian production, or the persisting instability of such top-notch producers like Venezuela and Nigeria, not to mention the Lybian conundrum. All this has lead to a rapid erosion of a 2 million barrel excess in production causing prices to rise, now at $50 a barrel. In the midst of such uncertainty, the full potential of Iran’s post-sanctions oil production to the world stage should be enough to balance the market and favor the likelihood of a positive outcome of OPEC’s next meeting scheduled for June 2

http://www.abo.net/oilportal/topic/view.do?contentId=2623597&currentpage=1