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Peak Iran: ‘One of the most underappreciated geopolitical risks in the oil market’

Public Policy

As RBC’s head of commodity strategy in New York, Ms. Croft is closely monitoring the mounting tensions to determine what they could mean for the Iranian nuclear agreement, and, thus, crude supply and prices.

And warning about the “precarious” nature of it all.

She was referring in a recent report to President Donald Trump’s comments on the multination deal, which allows for an easing of sanctions amid nuclear restrictions on Iran.

“President Trump’s speech at the UN [last] week, as well statements by senior administration officials, underscored just how precarious U.S. participation in the Joint Comprehensive Plan of Action (JCPOA) really is, as well as the strong possibility that the White House will opt to decertify Iran next month,” Ms. Croft said.

Mr. Trump has to certify to Congress, every three months, that Iran is meeting its commitments under the nuclear agreement, and the next chance to do that is in mid-October.

And while the world has been glued to America vs. North Korea, troubles are escalating here, too.

Mr. Trump warned about Iran’s missile capacity in his UN speech last week, prompting a response from the Iranians to, basically, screw off.

Then, over the weekend, Iran announced it had tested a medium-range Khorramshahr missile, defying Mr. Trump with a weapon that boasts a range of 2,000 kilometres and the ability to carry many warheads.

The test was broadcast on state TV, and the U.S. president responded with this tweet: “Iran just test-fired a Ballistic Missile capable of reaching Israel. They are also working with North Korea. Not much of an agreement we have!”

“Trump administration officials have demanded enhanced international inspections of Iranian facilities – including military sites – as another key precondition for remaining in the JCPOA,” Ms. Croft noted.

“We also contend that such a request will also be dead on arrival in Tehran,” she added in her report, before the latest missile test.

“In the event that Trump opts to decertify Iran, a debate will commence in Congress on whether to reinstate sanctions that prohibit investment in the Iranian upstream sector and call for consuming countries to make significant reductions in Iranian crude oil imports every six months.”

In its latest outlook, Société Générale also warned of this risk, though the road to sanctions is unclear.

“In a low-probability but high-impact scenario, the U.S. could unilaterally reimpose banking and financial sanctions on Iran; this could quickly remove a large volume of crude (of the order of 1 million barrels a day or more) from the markets and provide $5 of upside for crude prices; however, the upside would be limited by high commercial crude stocks and also by quick increases in replacement sour crude from Saudi Arabia, Russia and other countries,” said Mike Wittner, Société Générale’s global head of oil research.

Mr. Trump is obviously leaning toward, and certainly sending signals that, he’ll shoot down Iran in mid-October.

“It appears increasingly likely that Trump will not certify,” Mr. Wittier said, pointing out that that wouldn’t kill the agreement.

“However, it would pass the issue to the U.S. Congress and give them the option to re-impose sanctions on Iran,” he added.

“This would be a very big fight. Speaker [Paul] Ryan has said that he supports keeping the nuclear deal in place.”

Globe and Mail

6 Comments on "Peak Iran: ‘One of the most underappreciated geopolitical risks in the oil market’"

  1. Anonymouse1 on Tue, 26th Sep 2017 12:09 am 

    The above article, courtesy of Globalist and Fail, is an utter of waste of photons. Like, pretty much everything else the G&M prints…or reprints rather.

  2. Davy on Tue, 26th Sep 2017 5:29 am 

    If you dig a little deeper you will see Iran faked the missile test or was it a fake fake missile test. Who friggen knows anymore what to believe. If it was a fake missile test it fooled Trump who immediately tweeted without first checking with his intelligence experts. That won’t be the first time.

  3. Sissyfuss on Tue, 26th Sep 2017 9:36 am 

    President Bluto’s creed is “Strength Through Ignorance.”

  4. fmr-paultard on Tue, 26th Sep 2017 10:23 am 

    sis dear u said u have an ex in FL or somewhere. Do you support women in the armed forces? I don’t score but I respect and love women. I get very excited that they take control of their own lives. Coming closer to death and danger helps set ones priority straight.

    I was a confused messed in college with a useless Liberal Arts degree and engineering is boring with the details. We even joked that the Chem department should be dismantled and replaced with Schoedinger Eq. How dumb and arrogant we were.

    Anyways supertards knew what they want to do in life and that gave them a clear advantage. The rest of us tards started too late. We run to catch up with the sun but it was shrinking…

  5. Sissyfuss on Tue, 26th Sep 2017 8:33 pm 

    That was your most poetic post to date, fmr fmr. My ex from Florida is six feet under which means if I made love to her today it would exactly replicate the passion she exhibited on our wedding night. Get a hooker, fmr and you will feel forgiveness towards women at least until your johnson turns purple and falls off.

  6. Antius on Wed, 27th Sep 2017 6:44 am 

    “what financial collapse? one can’t be in the same breath talk about fiat nature of money while also mentioning collapse.
    and at the same time agreeing with antius that peak oil doesn’t mean higher price.”

    Peak Oil is leading to lower prices because wages and employment levels for non-elite workers (i.e. those without special skills) are stagnating or declining depending upon where you look in the world. On paper, Western economies are growing at a mediocre rate, but all of the new wealth flows into the hands of an increasingly small number of people. Where I live (the UK), wage rises for non-elite workers are lower than inflation and have been in real terms for quite some time. The rich consume a greater proportion of services per Pound (or Dollar, Euro, etc.) of wealth spent. The shifting wealth distribution in consuming countries is therefore creating an illusion of peak demand. Many commentators assume without bothering to carry out proper investigation that this is some kind of post-industrial efficiency gain. What is actually happening is demand destruction due to declining wealth in the majority of the population that does not own productive capital or possess some indispensable skillset. This will probably lead to financial collapse, due to: (1) the drain on government finances; (2) political instability (i.e. the growing power of Corbyn and his loony socialist policies); and (3) the inability of those at the bottom to afford the products of the economy (deflation).

    “he’s also into virgin bribes so one can’t trust his thinking 100%.”

    You seem to obsess over sexual fantasies that revolve around being dominated by soldier women with guns. If that works for you, I am happy for you (and GI Jane).

    I am fortunate enough to have benefited from a (at most times) happy and stable marriage. It has been a source of strength for me and my wife alike – we look after each other and never have to face our problems alone. A lot of people I know haven’t been so fortunate; more and more people live alone, fail to achieve a stable marriage and either don’t have children or struggle to bring up children in single parent families. I think there are a variety of reasons why this is happening and I doubt there is a simple way of correcting the damage. I think half-baked ideas about female sexual liberation are responsible for a large part of the damage and doubt that they have liberated women at all. They have degraded Western women.

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