A Bad Time to Lose Iran

Or least Iranian oil.

Reports surfaced this week that sanctions are decimating Iranian crude exports. India’s imports from the pariah nation appear to have fallen 60% in June, year-on-year. Iran’s top four customers–China, Japan, India and South Korea–probably dropped their imports by a third.

The loss of this supply is going to make things interesting for global oil trade.

That’s because the disruption comes just as the differential between European Brent crude and American West Texas Intermediate has collapsed. Brent had been trading at premiums of up to $23 above WTI, as recently as February. But this week the two crudes hit parity for the first time in three years.

The result is Brent is suddenly a lot more attractive for refiners in the U.S. Gulf Coast. Those users will undoubtedly be eying increased imports of oil over domestic supply.

But they’ll be competing with the rest of the world–and especially Asia–as it scrambles to find supply outside Iran.

A good time to look at plays linked to non-WTI oil prices.

Here’s to the world of oil,

Dave Forest

This piece has been cross-posted from Oil Price with permission.

2 Responses to "A Bad Time to Lose Iran"

  1. Socius   July 26, 2013 at 7:40 pm

    "Pariah Nation?" Really? While it has the NAM presidency and has the support of the majority of the countries in the world? Seriously man go fuck yourself. You either have absolutely no clue about international politics or you're pushing the same old agenda.

  2. ZTTJWH   July 27, 2013 at 11:12 pm

    I am not Iranian. But let me straighten out Mr Forest:

    Iran is a success story — under sanctions, they have transformed their economy and society — and moved rapidly on to non-oil revenues and reduced oil-based subsidies. Less they export hydrocarbons, the more future wealth. Besides Iran has increased a number of petro-chemical product exports which are high-value revenues than just oil-exports.
    Iran ranks 15-th in scopus world ranking in engineering and technology and has a very good space program
    Meanwhile Saudi Arabia, does not even have indigenous technology to peel bananas — and yet wants to be the center of the muslim world.