How would the end of economic sanctions against Iran affect oil markets?

There are predictions that the end of economic sanctions against Iran could shake up oil markets.

From the source: "The more oil it (Iran) exports, the more likely prices will drop even more. Iran has relatively low production costs compared to other countries, but another slump in prices would put its plans at risk. The country desperately needs heavy investments in its out-of-date oil infrastructure."

http://money.cnn.com/2016/01/16/investing/iran-sanctions-lift-oil/index.html

 

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The oil price has been dropping because some of the oil producers wanted it to drop. They wanted to push competitiors out of the market which had higher production costs, or even push compatitors out just for political reasons, regardless if the lower prices caused harm to their own countries.

Since this market is quite complex and the market is not only driven by supply and demand, but also by politics and "this is my enemy, I must harm them even at the cost of harming myself", predictions will be very hard.

Saudi Arabia has been working on lower oil prices since quite a while. This harmed Russia, which was welcome to the USA, which are traditionally supporters of Saudi Arabia, but it also harmed just the rising fracking business in the USA, causing some companies to go bankrupt.

A baffling thing, for me, happening between befriended countries.

Anyways, Iran and Saudi Arabia are rivals. It's unlikely that Saudi Arabia will allow higher prices again, since Iran would benefit from that. Thus I expect a longer low of the prices.

For Iran, a low price is bad, but still better than their former problems, when they could not sell oil freely at all. Any income will be welcome to the country.

Besides that, I know that companies from my home country are interested in cooperations and investements in Iran. So it's not only the oil. Iran is an interesting partner for machine construction as well. They have a good number of well educated engineers, also female ones, which is surprising for a conservative muslim country. Still many of the population remember days of less religious supression and/or look forward to such times to come back. These days Iran has become a country where muslim rules are widely accepted in the public areas, but families insides are often oriented more modern, which shows in the good edcuation levels of the women there, and the options of women to get good, even influential, jobs.

I'm watching this with big interest, since I, personally, see Iran as a country with a potential to come back to a modern and free society. At least more potential than some of the neighboring countries there. Maybe I'll be wrong, but I keep the hope. Also keep the hope that cooperations with western partners will help the society to work slowly towards a more free, western-ortiented culture.

 

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Barrel of oil now cheaper than an actual barrel to put the oil in, with a price below $28.
"RAC wagered that if the price of oil slid below $20 barrel, it could push petrol prices to 90p a litre - while a fall to $10 a barrel or less could see petrol sold at 86p a litre, or cheaper than a bottle of water."
Maybe if you drink Perrier.
http://www.independent.co.uk/news/b...arrel-of-oil-including-a-barrel-a6818786.html

 

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