President of Iran, Hassan Rouhani, was
Three publicly traded companies on three separate exchanges have paid as much as $3 billion to obtain
Total SA has also entered into an
Iran only wishes to return to their production level of 12 percent of OPEC’s total production. As of October,
Saudi Arabia, Iran’s closest rival in oil production, is unhappy to see Iran’s advances. More competition means fewer profits for Saudi Arabian oil majors like Saudi Aramco. The company is privately owned but there is potential for an IPO in the next year or two. It would be in investor’s interest to short their currency, the Saudi Riyal, while holding long positions in the companies maintaining the three new fields mentioned above.
OPEC is planning on excluding Iran from the production cut to allow them to regain their market share. However, if Iran is to achieve their ambition faster than expected, OPEC may consider including them. OPEC is meeting once more on November 30th to continue discussing the planned cuts. OPEC has mentioned previously they wish to limit oil production to less than 33 million bpd, a number that is becoming more and more unlikely as production further accelerates.
A continued inundation of supply for crude oil will only lower the price of oil further. Economists are skeptical that a deal will be approved at the end of the month meaning oil prices could fall as low as $40 per barrel. If a deal were to remarkably emerge, this could result in a price surge. As we get closer to the meeting, investors should prepare their portfolios with straddles or, for the confident speculator, a spread in the direction of their interests.
By Michael McDonald of Oilprice.com
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