Yesterday we reported that there is a small, but not improbable, chance that Trump could end up becoming OPEC’s best friend should the president elect seek to undo Obama’s landmark foreign policy deal, the Iran Nuclear Agreement: “suddenly there is a ray of hope in OPEC’s dark world, and it comes courtesy of president-elect Donald Trump, who just may eliminate as much as 1 million barrels of OPEC oil output, or the cartel’s entire excess production, should he undo the deeply unpopular within GOP circles Iran nuclear agreement, which would also collapse Iranian oil exports and send the price of oil surging.”
It remains to be seen if Trump has changed his view on the Iran deal, and certainly if he would engage in an action that would benefit Saudi Arabia while making millions of US motorists sad once gas prices spike should Iran’s 1mmbpd in excess oil supply be taken offline.
Some of our readers pointed out that far from sending the price of oil spiking, there was an alternative explanation, to wit: “if there is a possibility, however slight, of the Iran nuclear deal being torn up in 68 days on 20 January 2017, then what does this mean for Saudi Arabia and the upcoming OPEC negotiations?” It does 4 things:
Further highlights the importance of collective OPEC cuts Encourages Iran to produce MORE not LESS oil Further reduces the likelihood of a material deal Reduces likelihood of material cuts from Saudi Arabia, for if they cut and the Iran deal is torn up, then they will have given away market share that will be reclaimed by Libya, Nigeria, Iraq and Russia
This post was published at Zero Hedge on Nov 14, 2016.
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