'If OPEC Survives, It Will Be Without Iran': As Saudi Arabia’s Oil Production Surges, Analysts Ponder The Future
You can’t say the Saudis aren’t trying when it comes to pacifying Donald Trump.
The Kingdom pumped some 10.5 million b/d last month, the most since late 2016 amid pressure from the Trump administration to put the brakes on rising crude prices that threaten to eat away at consumer gains from the GOP tax cuts by raising prices at the pump.
Unilateral action has been variously decried by Iran, who initially attempted to undermine a production hike deal at the OPEC meeting in Vienna last month, imploring the cartel to avoid becoming a slave to the U.S. President’s fiscal agenda.
Subsequently, news that the State Department is pressuring U.S. allies to cut imports of Iranian crude to zero by November angered Tehran further and ultimately contributed to supply concerns that effectively negated the impact of the promised production hike by Saudi Arabia, Russia and others. Two Saturdays ago, in a truly remarkable weekend tweet, Trump suggested he had convinced King Salman to hike production by 2 million b/d.
“Any production increases above limits agreed to by OPEC are a breach of output agreement reached last month in Vienna”, Iran’s Oil Minister Bijan Zanganeh said the next day, in a letter to OPEC President Suhail Al Mazrouei.
In its latest monthly report, OPEC says oil demand will leap past 100 million b/d in 2019. To wit:
World oil demand is assumed to rise by 1.65 mb/d in 2018, unchanged from the previous month’s report despite revisions within the regions, which offset each other. Global world oil demand is now projected to average 98.85 mb/d.
For 2019, initial projections for world oil demand growth are pegged at 1.45 mb/d with total annual global consumption anticipated to exceed the historical threshold of 100 mb/d.
The cartel sees non-OPEC oil supply next year growing 2.1 mb/d for an average 61.64 mb/d.
As for June, here are the relevant excerpts from the report with the above-mentioned numbers for Saudi Arabia highlighted:
And here’s the accompanying color:
According to secondary sources, total OPEC-15 crude oil production averaged 32.33 mb/d in June, an increase of 173 tb/d over the previous month. Crude oil output increased mostly in Saudi Arabia, Iraq, Nigeria, Kuwait and UAE, while production showed declines in Libya, Venezuela and Angola.
As a reminder, disruptions in Libya and Venezuela are conspiring with jitters about the Iran sanctions to effectively overwhelm the Saudis’ efforts to put a brake on rising prices.
Washington’s allies, unsure of what the future holds for waivers, are already beginning to halt Iranian crude imports, prompting analysts to quickly come to terms with a new reality.
On Wednesday, Petromatrix (a consultancy) said OPEC might have a hard time surviving in its current form given the cooperation between Riyadh and Moscow on replacing Iranian barrels lost to U.S. sanctions.
“The framework of OPEC is already changing due to the participation of Russia, but all the public U.S. statements about Saudi Arabia coordinating with the U.S. to replace oil supplies for those that stop importing crude oil from Iran creates a basis for the future obsolescence of OPEC as it currently stands”, Petromatrix said, adding that “if OPEC survives as an organization, it will have to be without Iran”.
Full July OPEC report
Disclosure: None of what I write here is to be construed as advice to buy or sell any kind of asset. It is merely my personal and not my professional opinion. Any asset can go to zero.
Iran is not a national security threat to the USA but obviously that nation makes the Saudis and Israelis nervous. With Trump our allies in the middle east have become more important to us than Canada and Europe and Japan. It would be interesting to be a fly on the wall to see if big finance is buying into or even directing this shift.
Did you know a federal judge found Iran complicit in 9/11? That Iranian proxies have killed hundreds of U.S. troops in Iraq, Afghanistan, and Saudi Arabia? That Iran is developing nukes, lICBMs, and a weapon that can destroy electrical grids? That they call us Great Satan, leading to the obvious conclusion that those weapons are targeted against us? That they have taken dozens of U.s. citizens hostage? that their ultimate undisclosed goal is to take over the world and convet everyone to Shia Islam?? That they are the leading sponsor of terror and developing nukes? all of that is totally true...and you dont think they are a national security threat to us?
Larry, until we start being honest about who really did 9/11 and who was really involved our nation is headed on a slippery slope of moral decline. I take the word of firefighters. And Dan Rather. There were explosions in the buildings. The planes by themselves did not take the trade center down. There is even video proof of squibbs ejecting from lower windows.
But as far as Iran is concerned, they are a sponsor of terror because we deposed their king, the Shah of Iran, and in their history we are an ever present danger. Perhaps if we did something for the Palestinians, Iran would modify its mistrust. We have done nothing in the middle east to encourage trust. Regime change does not encourage trust. Yes, Iran has done some awful things and has awful leadership. But we have as well. You just don't want to admit it, Larry.
And we could be headed toward even greater trouble as a nation if Donald Trump's worldview is applied to the fullest: www.talkmarkets.com/.../trumps-punishment-of-china-the-start-of-a-radical-rejection-of-foreign-capital
Say it ain't so Gary. Please tell me you aren't one of those conspiracy nuts who thinks the US was secretly behind 9/11.
For some, conspiracy is easy to spot. Others not so easy. But why don't we look at a revealed conspiracy that has to do with economics? Kashkari, president of the Minneapolis Fed revealed that the Fed prunes wages. If you look at the chart it is pretty obvious. Many, like Jeffrey P. Snider says the Fed is grossly incompetent. I would agree, and that is built in. But, the liquidations over history, and this obvious pruning of wages, where a rise in wages always precedes a recession, is a proven and admitted conspiracy. You guys are so certain there are no conspiracies. Read: www.talkmarkets.com/.../kashkari-reveals-dark-secret-fed-plan-for-wages
As for 9/11, you are very naive if you believe the consipiracy rants. People can always find evidence to support these crazy claims, but often when you get to the bottom of it, the evidence isn't really there or is explained away by something else. Sometimes the simplest explanation is the easiest.
Well said Craig. The biggest problem with conspiracy theories is that they always require an intricate web of lies. Dozens of people (if not hundreds) secretly working to pull the wool over eyes of everyone else. But people can't keep a secret. No way no one would have come forward, or leaked on their death bed the truth.
Rosswell, the moon landing, Sandy Hook, 9/11. Do those people really think we are living in the Truman Show? Does anything real happen? Wake up people.
Some people simply hate. They may use an excuse but if it wasn't that, it would be something else. I don't think that Iran or any Arab country even cares about the Palestinians. They often disparage them and none of them have been willing to open their doors to them. Rather it's an excuse to deflect their own people's anger from their own situatons - corrupt governments with no freedoms.
Desptie the constant slander campaign, I don't even think the average Iranian hates America or Israel. It's just their leadership. If you read comments on Quora, you'll see this.
Thats your great source? Dan Rather? The man who was fired for lying about Bush? Versus a federal judge who reviewed tons of evidence. Whos more believable? abcnews.go.com/.../story?id=54862664
We didnt depose the Shah. The Iranian Nazi mullahs did. Theyre supposedly angry at us because we deposed their democratically elected president in the early 50s. How long will they keep that grudge? should we be bombing Germany and Japan because of World War II and calling them Great Satan and killing their troops?
anyway it's an excuse. Theyre a brutal Nazi regime that is hated by and get into wars with all of their neighbors. And they admit they want to take over the world to advance their insane messianic agenda (just like the Nazis)
As Ive asked you before, how many of the Trump haters' nightmare scenarios have come true in the 18 months hes been president? Actually, zero, and even millions of Dems who are more worried about the country and themselves than PC/libertarian dogma and politeness are becoming fans of Trump.
Iraq started the Iran/Iraq War. The nation of Iran has not started a war for over 200 years. I am not defending Iran. It is a brutal regime towards its people. But I don't know where you are getting your information, Larry. Even Reddit analysis marks your view as incorrect: www.reddit.com/.../when_was_the_last_time_iran_attacked_another/
Another great source..some amateur posting on Reddit.
Tens of thousands of Iranian proxies, paid for and directed by Iran, have killed hundreds of thousands in Syria since 2013, bombed our soldiers in Khobar towers, in saudi Arabia in 1996, bombed our soldiers in Iraq and Afghanistan, for many years. IRanian proxies also started a war against the Yemeni governnment that has already killed thousands. They have also taken over the ELbanese government through terror. https://www.unitedagainstnucleariran.com/veritas www.nytimes.com/.../iran-syria-israel.html www.bbc.com/news/world-middle-east-29319423 www.reuters.com/.../lebanon-emerges-from-crisis-with-iran-on-top-but-risks-remain-idUSKBN1E11VV
That's a good point Larry. Iran constantly attacks Israel with missile attacks and terrorist attacks through its proxies. Is it really so different than Russia's attack on Ukraine which they claimed was a spontaneous act they had no control over?
We supported rebels associated with ISIS in Syria against a sovereign government. We invaded sovereign Iraq to dispose of weapons of mass destruction that did not exist. Now Iraq and Iran are buddies. Can you blame nations that oppose our regime change and aggressive imperialism?
While we (and many other nations) did support rebels against a tyrant and dictator who was murdering his own people, not all rebels were associated with Isis. And frankly, we should have done more to get rid of Addad.
As for Iraq, they may not have had WMDs but Saddam Hussein did everything he could to make us believe that he did. That strategy backfired on him. The Husseins were ruthless people who murdered thousands of their own people and his son had a tradition of raping women on their wedding day. Sick people that the world is better off without.