Iranian oil may soon be flooding the market and giving the Eagle Ford producers a run for their money.
Related: Will Iranian Oil Be Bad for Eagle Ford?
Last Saturday the new arrangement between the U.S. and Iran went into affect that would free the country from international sanctions that were imposed in 1979.
“A new wave of oil from Iran will flow into a global market awash in oil where prices are plunging to depths not seen in a dozen years. With a historic nuclear deal between Iran, the U.S. and five other world powers set into place this weekend, a European oil embargo on the world’s seventh-largest oil producer will end.”
The International Energy Agency says that Iran has about 38 million barrels of oil in reserve that can enter the market quickly at a rate of 400,000 to 500,000 barrels a day.
Some speculate that the recent decline in crude prices to below $30 is a reaction to the anticipated deluge of oil from Iran and there are predictions of barrels going for $20 soon. But now everyone believes that the Iranian oil will affect prices.
“In the case of Iran bringing more oil to market, it’s going to happen, and even if it takes a little longer than the market believes at this time, it won’t have an impact on the price of oil; although it could give it a temporary boost if it is found the export time frame isn’t a near as supposed.”