So what about Iranian production?




( http://oilprice.com/Latest-Energy-News/World-News/US-Shale-Declinin... )

No doubt that WTI was pushing $60 crude in June.. when the Iranian deal was announced in mid July.. Crude broke to the downside.. so that was a trigger for this summer's sell off..  no doubt.

What the Iran nuclear deal means for oil prices

Updated by Brad Plumer on July 15, 2015, 7:27 a.m. ET 
( http://www.vox.com/2015/7/14/8962651/oil-prices-iran-nuclear-deal )

From an economic standpoint, one of the most significant aspects of today's US-Iran nuclear deal is that it could open up Iran's vast crude oil reserves to the rest of the world. Once Europe and the US ease their sanctions, Iran can ramp up crude production and exports, locking in this new era of low oil prices.

But here's the catch — this won't all happen immediately. It will likely take at least six months before we see any significant oil impact from the deal, and possibly even longer than that.

Even if all goes according to plan, the US and EU won't lift sanctions on Iran until 2016 at the earliest. Once that happens, Iran can finally start selling some of the roughly 30 to 40 million barrels of oil it currently has stored in vast floating tankers off its coast. That could push down, modestly, on oil prices.

But after that, it might take years for Iran to get production in its crippled oil fields back to pre-sanctions levels. The country does possess vast crude reserves — but that doesn't mean it's all coming online tomorrow. 

Iran is sitting on some 158 billion barrels of crude oil, the fourth-largest proved reserves in the world. But thanks to a slew of sanctions by the United States and Europe in recent years — meant to pressure Iran over its nuclear program — the nation's oil fields have fallen into serious decline, driven by a lack of investment.

Back in 2008, Iran produced some 4 million barrels of oil per day. By May 2015, that had fallen to just 2.8 million barrels per day. (To put that in perspective, the entire world uses about 90 million barrels of oil per day, so this is a significant amount.)



The article goes on to explain that the 30 to 40 myn bbls of stored crude accumulated unsold during the sanctions can be sold relatively quickly.. but that it may be awhile before Iran will have sanctions lifted.. at least 6 months post ratification.. for the beginning of the process.. centrifuges must be removed before Crude exports will be allowed.. so this actually could take quite awhile.. the first half of 2016 at the earliest.. assuming things go as planned..???

But Nephew, for his part, is skeptical that Iran can ratchet up production that quickly. For one, he says, Iran is facing "fatigued fields and antiquated equipment." Once pumping ceases in a field, it's not so simple to just flip a switch and turn it back on. By some estimates, Iran will need $50 billion to $100 billion in foreign investment to get production back up to pre-sanctions levels. That could take years.

What's more, Nephew points out, foreign investors are likely to be wary about rushing into Iran. "Iran itself is a difficult environment in which to work," he writes. "The Iranian bureaucracy is formidable and it will be a real achievement if the Iranian government is able to deliver on its bait to international oil companies and others to make the process less painful."

Plus, there's always the risk that the nuclear deal falls through and the United States and Europe reimpose sanctions: "Sanctions snap-back is a real threat and businesses would be well-advised to design their contracts with Iran accordingly. Companies and banks that develop business ties in Iran will need to be prepared to have them vacated immediately if Iranian cheating is detected."

Bottom line: The IEA thinks Iran can get back to producing 4 million barrels of oil per day — the level it was at in 2008 — by the end of this decade. Oil Minister Bijan Namdar Zangeneh wants Iran to resume its spot as the world's No. 2 oil exporter behind Saudi Arabia (a spot currently occupied by Russia). But that's far from assured, and there could easily be hiccups on the way.

 So all that sounds pretty rosey.. at the time of the announcement.. the US Crude decline was not well understood.. However today.. especially after the revisions to production in some of last weeks reports..









( http://oilprice.com/Latest-Energy-News/World-News/US-Shale-Declinin... )

It is obvious that US Shale Crude production is in decline.. already down 300 k bbls per day from the peak.. in 6 months.. that could be another 500 k bbls per day.

Some say that the US is in cahoots with KSA to keep pressure on "the bad guys"... (I actually probably buy into this one a wee bit...)

( http://oilprice.com/Energy/Oil-Prices/Did-The-Saudis-And-The-US-Collude-In-Dropping-Oil-Prices.html )

“What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. “To harm Russia.”

Many believe the oil price plunge is the result of deliberate and well-planned collusion on the part of the United States and Saudi Arabia to punish Russia and Iran for supporting the murderous Assad regime in Syria.

Punishing Assad and friends

Proponents of this theory point to a Sept. 11 meeting between US Secretary of State John Kerry and Saudi King Abdullah at his palace on the Red Sea. According to an article in the Wall Street Journal, it was during that meeting that a deal was hammered out between Kerry and Abdullah. In it, the Saudis would support Syrian airstrikes against Islamic State (ISIS), in exchange for Washington backing the Saudis in toppling Assad.

If in fact a deal was struck, it would make sense, considering the long-simmering rivalry between Saudi Arabia and its chief rival in the region: Iran. By opposing Syria, Abdullah grabs the opportunity to strike a blow against Iran, which he sees as a powerful regional rival due to its nuclear ambitions, its support for militant groups Hamas and Hezbollah, and its alliance with Syria, which it provides with weapons and funding. The two nations are also divided by religion, with the majority of Saudis following the Sunni version of Islam, and most Iranians considering themselves Shi’ites.

 that makes sense..

The US Shale producers are probably not the only ones who will be impacted by lower prices.. 

 

So if all goes according to plan.. KSA sits atop the world's Crude Oil market share.. and the US and KSA have Iran/Russia/Syria contained... 

.. maybe I'm drinking too much of the kool-aid.. but the pieces do fall into place.. as I've noted before.. why else would KSA turn down $$$



KSA would have made a LOT more $$$ by reducing production last fall vs the path they chose..