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How Turkey, Trump, and Inventories Are Affecting Crude Oil

PART:
1 2 3 4 5 6
Part 4
How Turkey, Trump, and Inventories Are Affecting Crude Oil PART 4 OF 6

How President Trump Could Impact Iran’s Crude Oil Production

President Trump 

At the United Nations meeting last week, President Trump called Iran’s government “a corrupt dictatorship behind the false guise of a democracy.” He considers the 2016 nuclear deal with Iran to be one of the worst deals, signaling that Trump is still looking to cancel the deal, as he promised during his election campaign.

The United States needs to check the compliance of the nuclear deal every three months. The next compliance deadline for the nuclear deal is October 15. Meanwhile, Iran’s President Hassan Rouhani criticized Trump’s leadership as “rogue newcomers to the world of politics” at the UN meeting, suggesting that the United States and Iran are entering into a war of words—a clear deterioration of the relationship between the two countries.

How President Trump Could Impact Iran’s Crude Oil Production

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Iran’s crude oil production

Iran’s crude oil production has risen by 1 MMbpd since the United States lifted sanctions against Iran in January 2016. Iran’s crude oil production was at an eight-year high at 3.8 MMbpd (million barrels per day) in August 2017. High crude oil production from Iran is bearish for crude oil (BNO)(USO)(DWT) prices.

Lower crude oil prices have a negative impact on oil and gas producers earnings (XLE)(XOP) like Saudi Aramco, National Iranian Oil Company, PDC Energy (PDCE), and Cobalt International Energy (CIE).

Iran’s crude oil exports 

Iran’s crude oil exports rose by 180,000 bpd from July 2017 to 2.135 MMbpd in August 2017. Iran’s crude oil exports rose 9.3% month-over-month. Exports rose despite the production cut deal.

Impact 

Iran is the third-largest crude oil producer among OPEC members. Iran plans to increase its crude oil production to 4 MMbpd by December 2017. It also plans to increase its production to 4.5 MMbpd by 2022. Any rise in Iran’s crude oil production is bearish for crude oil (BNO)(SCO) prices.

However, if US President Trump cancels the 2016 nuclear deal soon, it would mean a renewed imposition of sanctions against the country, which could again cripple its crude oil production and exports. A fall in Iran’s crude oil production and exports could tighten the global supply-and-demand balance, which would be bullish for crude oil (BNO)(USO) prices.

In the next part of this series, we’ll discuss how OECD crude oil inventories impact crude oil prices.

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