In 2014, the United States became the world’s largest oil producer. This shook the normalized global economic order and stirred some internal cultural shifts in significant oil-producing countries. The fracking boom, responsible for the oil and gas preeminence enjoyed by the U.S., along with simple economic realities, also sent global supply outrunning demand. The oil-exporting countries that are not taking this too well---Russia, Venezuela, and in the spotlight, Saudi Arabia---are now in a pickle apropos cooperation toward curbing global production.
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| Image source: LeMonde.fr |
While the U.S. is also hurt by falling oil prices, it can afford some ascendancy where supply is concerned. It can go as far as being the playground elder, giving Saudi Arabia a sermon about sharing oil markets. President Barack Obama’s landmark leniency toward Iran has also thrown up conspiracy theories about the causes of falling oil prices. Some have accused Saudi Arabia of sabotaging the prices to put competitors like Russia, Iran, and the U.S. in a tight spot. Some see the U.S. using Iran as a pawn against Russia.
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| Image source: iran-oilshow.ir |
Wherever the undercurrents lie, Iran will again be making its mark in an industry where it has a historical and competitive advantage. Before Western sanctions obstructed the flourishing of its oil and gas industry through the denial of Western technology, Iran exported oil to Europe. The relationship has been given another go this year, with the signing of the nuclear treaty and the lifting of the embargo. Iran will also likely look to the Old World for technologies in refining and developing hydrocarbon fields.
Its four-year absence in the industry might reveal new, oil-hungry export markets such as China, the world’s largest importer, Japan, and India. The country’s oil potential could revert to pre-sanction, historical highs of six million barrels a day, the going rate on the eve of the 1979 Revolution. Iran’s potential in the oil and gas industry could introduce more geopolitical upheavals, not least in the board rooms of OPEC.
The president and founder of Southlake Resources Group, Cody Winters is an experienced and accomplished oil and gas businessman for over 12 years. Visit this blog for more updates about the industry.
