Its easy to be overly focused on North America because of the detailed disclosures, and because that is where the major production growth has been over the past few years. But Iraq has been a huge source of production growth over the recent months. Historically they have fluctuated between 1 and 3 million barrels per day over past decades, depending on wars and insurgencies etc. Last December they reported that they produced a record 4 million per day. The Iraqi oil ministry has previously stated that they have the intent to produce 9 million a day within a decade! There is no doubt that they have the fields to do it, it is just a question of stability, attractive fiscal terms, and political will. Although ISIS has periodically threatened supplies, production has actually been growing in the ISIS era. Also, recent agreements between Kurdistan and the central government have allowed Kurdish oil in the north to flow more freely, and this is also indicative of further increases in production going forward.
Iran has also been an under performer ever since the fall of the shah. In recent years production has declined to 3 million per day, partly because of the sanctions. If a nuclear deal were reached production could potentially go up dramatically. It could even double. Who knows how likely this is. But if you hear "nuclear deal has been reached" this is definitely long-term bearish for oil prices.
On the other side of the ledger, I think there is some risk that Russia, the world's largest producer, could see declines due to sanctions, especially if we get stepped-up sanctions due to further deterioration of the Ukraine situation. In fact it was a collapse in Russian production that softened the 1980s glut, after the economic collapse of the Soviet Union. Another possibility is that Russia cooperates with OPEC to prop up prices. In the past the Russians have said that because their industry is in private hands they have no way to cut production. No one believes that. Certainly Putin could tell them to cut production, and they would do it. It makes sense for Russia to cooperate with OPEC.
Iran has also been an under performer ever since the fall of the shah. In recent years production has declined to 3 million per day, partly because of the sanctions. If a nuclear deal were reached production could potentially go up dramatically. It could even double. Who knows how likely this is. But if you hear "nuclear deal has been reached" this is definitely long-term bearish for oil prices.
On the other side of the ledger, I think there is some risk that Russia, the world's largest producer, could see declines due to sanctions, especially if we get stepped-up sanctions due to further deterioration of the Ukraine situation. In fact it was a collapse in Russian production that softened the 1980s glut, after the economic collapse of the Soviet Union. Another possibility is that Russia cooperates with OPEC to prop up prices. In the past the Russians have said that because their industry is in private hands they have no way to cut production. No one believes that. Certainly Putin could tell them to cut production, and they would do it. It makes sense for Russia to cooperate with OPEC.
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