Energy and Capital editor Keith Kohl explains why Iran's latest move may take OPEC out of both oil and gas in one fell swoop.
Iran's Latest Deal Signals More Bad Times for OPEC
[Keith Kohl Photo] By [Keith Kohl](
Written Wednesday, July 5, 2017
Iran may be the bullet that finally takes down OPEC.
The country’s already riddled with controversy surrounding alleged terrorist connections.
Sounds familiar, doesn't it? It's only been a few weeks since Qatar came under fire from Saudi Arabia for its ties to terrorism.
It’s a geopolitical powder keg, and things are not getting better.
And neither side is willing to back down.
But while we've waited to see if Qatar would capitulate to Saudi Arabia's (and friends') demands, you might've missed another story...
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Iran: Back on the Oil Map
Let's face it: Iran is officially back on the world's oil stage, and it was the [U.S. that helped it get there.](
Sanctions from countries around the world have kept Iran’s production levels down for the last few decades.
Between 1979, when the sanctions went into place, and 2016, the country’s oil production plummeted from nearly 7 million bpd to less than 4 million.
It wasn’t until 2016 that the sanctions were lifted, starting with those imposed by the U.S.
Iran has been on the warpath ever since.
Even the recent production cut deal, which somehow managed to get Saudi Arabia and Russia on the same team, excluded Iran.
The country was, and still is, determined to grow its production back to pre-sanction levels, and it won’t be slowing down until it happens.
Here’s how well that’s going:
[Iran Crude Production]
It’s a work in progress.
Meanwhile, OPEC is still fighting to keep its market share from slipping away entirely. It’s long lost the battle with U.S. shale, but the war’s not over yet...
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Enemy of My Enemy
Even though Saudi Arabia and Iran seem to be on different sides of this fight, they’re going about solving it the same way: selling out.
Saudi Arabia, as you probably know, is looking to IPO its mammoth oil company, Saudi Aramco.
The company has been valued at more than $2 trillion and would be the largest IPO the world has ever seen!
That is... if anyone actually buys.
No doubt there will be people jumping on that bandwagon the moment it takes off, but there are a few things that may yet hold it back.
The biggest potential problem, of course, is the price of oil.
Oil stocks in general are looking a little speculative these days — at least those without the advantage of a good deal of [U.S. Permian acreage]( — and Saudi Arabia is only offering around 5% of the company to IPO anyway.
If the country hopes to raise oil prices before the deal goes through, it’s got a lot of work to do.
Even though its latest deal is a lot smaller, Iran may be getting the better bargain here.
You see, instead of outright selling its business, Iran is making new friends in Europe.
This weekend, it was announced that the country signed a deal with French Total SA worth around $2 billion.
The project buys Total a 50.1% stake in Iran’s South Pars oil field, a natural gas and condensates resource jointly owned by Iran and Qatar.
Could Iran be making the switch from oil to natural gas?
More importantly, how much longer would OPEC last if it did?
Think of it like this: the better off Iran is financially, the bigger its push back into both oil and gas will be.
And now that Iran is finally getting back into the game, this certainly won't be the last deal inked.
Their Loss
While OPEC’s problems compound, we’re seeing much brighter prospects a little closer to home.
Yet another oil resource, ignored for decades, has been quietly building up momentum.
Now, it’s ready to have what my colleague Christian DeHaemer calls its [“Bakken moment.”](
Longtime readers may remember when we first started talking about the Bakken shale play of North Dakota and how profitable it was for investors who got in early.
Chris has been hot on the trail of this newly revived oil play for months.
Tomorrow, he’ll be releasing his latest research detailing just how big this opportunity is and how you can get your piece of the action.
Newer readers who missed out the first time may just have a chance at their own “Bakken moment.”
Until next time,
[Keith Kohl Signature]
Keith Kohl
[[follow basic]@KeithKohl1 on Twitter](
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of [Energy & Capital]( as well as Investment Director of Angel Publishing's [Energy Investor.]( For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's [page](.
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