China and Iran Get Close: Impact on Crude Oil Market


Jan. 26 2016, Updated 9:19 a.m. ET

China, Iran, and crude oil

The recent visit of Xi Jinping to Iran has resulted in an additional $600 billion in trade deals over the next decade. China (FXI) is one of the biggest consumers of crude oil and natural gas. Iran accounts for a significant amount of crude oil reserves and the largest proven natural gas reserves. In 2014, China consumed 185.5 billion cubic meters of natural gas, which is 5.4% of the world’s total natural gas consumption. China also accounts for 12.5% of the world’s total crude oil demand.


[marketrealist-chart id=996806]

Article continues below advertisement

Chinese companies may also engage in developing oil and gas fields to strengthen Iran’s nonrenewable energy output. Iran has planned to raise its crude oil output by 1 million barrels per day in two phases. The recent deal with Iran marks a significant milestone for the two countries in terms of trade. The Chinese market is also important to other crude oil producers like Saudi Arabia. The recent deal may intensify the market share war between two regional powers, Iran and Saudi Arabia.

This series will focus on the following points:

  • China’s new diplomatic policy
  • the impact on Russian energy exports
  • Iran’s role as a leading nonrenewable energy supplier
  • Iran’s nonrenewable energy reserves
  • moving averages and analysts’ estimates for companies in different energy streams

The crude oil plunge and energy investors

The earnings of large cap energy firms like ExxonMobil (XOM), Chevron (CVX), and Occidental Petroleum (OXY) are inching toward new lows as their upstream businesses have been impacted by lower crude oil prices. However, thanks to the downstream segments, these companies are able to recover the income losses. The graph above shows the impact of crude oil on the performance of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).


More From Market Realist

  • Table Jack on 'Shark Tank'
    ‘Shark Tank’ Sharks Thought Table Jack Was a Wobbly Business Prospect
  • Woman using a DrainWig in a shower
    DrainWig Hasn’t Gone Down the Drain Since ‘Shark Tank’
  • Element Bars' Jonathan Miller on 'Shark Tank'
    ‘Shark Tank’ Stars Said Element Bars’ Valuation Was 'Insane'
  • Roger Altman
    How Evercore Chairman Roger Altman Made His Millions
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.