Iran Deal

[Harry Bosch]

With a good reason. The current increase in oil prices started in January 2016. It is normal cyclic price oscillation that is due to low prices discouraging investments which restrict supplies in the future.

That is true in general. Stormy is the Monica of 2010s.

Stormy is the Monica story times 100!

Derec: can you explain why American right wingers are so obsessed with hammering Arab governments who shield Shia terrorists, while giving such a pass to governments who shield Sunni terrorists? Sunni terrorists have killed 10 times more American civilians than Shia. I'm not aware of any Shia terrorists attack in the US. Shia bad guys mostly attack soldiers. Sunni terrorists mostly attack civilians. I don't get it. Personally, I think that we should withdraw from their crazy civil war.

We have more dead from the Shia if you count the military.

I do think it's more a matter of picking the targets they won't be harmed by going after, though.

Sounds like a good reason for us to withdraw from the US!

 

[Underseer]

Usually, in large, complex negotiations like this, the actual diplomats work out 99% of the deal before the big shots even show up, for a variety of reasons. Here we have Pompeo, Trump and a hollowed out state department, and a date set for June? I don't see how this can work, especially with North Korea having a penchant for...well, lying.

An actor on one side that that will not negotiate in good faith and is totally inept. Plus, North Korea as well. While I can hope for a miracle, I sure as hell am skeptical.

You're forgetting that Trump is the most brilliant president we've ever had. He's playing 47th dimensional chess while you're still playing checkers! [/satire]

 

[Derec]

Barring a real shooting war that takes out significant supply from the market, I do not think prices will go much higher than they are now.

With US sanctions on Iran coming back, especially if this administration goes anal on the EU over it, oil could make it $100.

I doubt it. Iran will still be able to sell to China at the very least. Also, 2018 is not like 2008. For one, we have fracking. And US drill count is on a significant rise, which means more supply going forward. Second, last thing oil producers want is $100 oil. In 2008 Tesla Roadster had just come out, but that was a plaything for the rich like the 911 or similar sports cars. In 2018 we have a dozen or so different EV cars, many of them affordable and practical for a middle class family. And while EV sales are still a small fraction of total car sales, the sales are increasing. Oil producers certainly do not want to accelerate the adoption of electric cars.

And if we are dumb enough to try to bomb Iran into submission, it would probably go quite a bit higher. Iran oil would be off market. Iraq oil would largely be off market as no tanker would go that far up the gulf. Iran has tons of medium range missiles and if they plan for us attacking, they shouldn't have much trouble taking Kuwait oil offline.

That's why I said "barring a real shooting war".

 

[Derec]

Or perhaps you just didn't bother reading the links that koy posted:

Well, Koy is not a little paranoid. See post #38.

Trump Iran sanctions just gave Saudi Arabia and Russia more clout in the oil market, so watch for higher prices
Trump’s Iran Policy Is Blowing Up His Energy Agenda

Doesn't change my point. You specifically linked rising gas prices "at the moment" with Iran deal collapsing, when in reality oil prices have been rising since the low in January 2016. Add to that the fact that we are in Spring, the time of year when gas prices traditionally rise due to refinery switch from winter to summer gasoline blend and people taking more road trips. So the current oil and gas prices are perfectly explainable without the Iran deal.

When you reduce the supply of Iranian crude, that makes the price of oil go up in the world market. Markets react. Gasoline prices go up. So does the price of delivering products to your local grocery store. Putin smiles. That would not be a "normal cyclic oscillation".

Current oil prices are due to normal cyclic oscillation of low prices reducing investment. Higher prices encourage investment, so that's where the cycle comes from. Nothing in current oil prices is indicative of anything more going on. That could change in the future, but right now it has no effect.

 

[Playball40]

Conservatives: this deal is a bad idea because Iran could start working on nuclear weapons again in 10 years!

Also conservatives: therefore, let's destroy the deal so that Iran can start working on nukes right away!
we can claim Iran is making a nuke and bomb the piss out of them.
No one rational makes arguments this bad. It's obvious they don't want to talk about the real reason they don't like the deal. Party before country!

I've corrected it for you.

 

[Derec]

Stormy is the Monica story times 100!

They are very similar I think. Both are distractions.

Derec: can you explain why American right wingers are so obsessed with hammering Arab governments who shield Shia terrorists, while giving such a pass to governments who shield Sunni terrorists?

Dafuq are you talking about, Hieronymus? US has done plenty of operations against Sunni terrorists: Al-Qaeda, ISIS, etc. I guess the difference is that the Sunni groups are in opposition to the Arab governments because they are seen as too secular for the terrorists, even the Saudis. But while not Arab, Taliban-government in Afghanistan was hammered quite decisively when they harbored Al-Qaeda before and after 9/11 attacks.
There is one Arab government shielding Shia terrorists, Syria, and US actions "hammering" them have been quite muted.

Sunni terrorists have killed 10 times more American civilians than Shia.

It's not like US is not going after Sunni terrorists though. We have been waging a more than a decade-long war in Afghanistan that was started because they shielded 9/11 terrorists. US has done numerous operations against ISIS. US has gone after Al-Qaeda in the Arabian Peninsula in countries like Yemen and even took out nominal US citizen Anwar Al-Alwaki. It's not exactly giving a pass to Sunnis.

I'm not aware of any Shia terrorists attack in the US. Shia bad guys mostly attack soldiers. Sunni terrorists mostly attack civilians. I don't get it.

And we should just turn the other cheek to our soldiers getting massacred like in Beirut?
And while I am not aware of any Shiite attacks on US soil, they have attacked and murdered civilians abroad - for example a Jewish community center in Buenos Aires in 1994 and a bus in Burgas, Bulgaria in 2012.

Personally, I think that we should withdraw from their crazy civil war.

Isn't that what Trump has announced right before Assad decided to use chemical weapons yet again?

 

[Derec]

Next will be something to do with shale. Either he’ll use this “crisis” as a reason to dump our own oil reserves into the market (thereby depleting them), or he’ll come up with some other way—buried deep most likely—to fuck up our oil reserves so that we too become dependent on Russian oil.

Reality check. It was Obama who (despite his "all of the above" approach early in his presidency) caved to radical environmentalists and blocked the DAPL pipeline that is carrying shale crude from the Bakken formation. Trump approved the pipeline and it is operational now.

And by “he’ll” I, of course mean, Putin through Trump.

Paranoid much?

What’s notable about the Trump administration’s outreach, however, is that it remains necessary even in the face of surging U.S. oil production that has put the country on course to soon be oil independent (on a net basis). The U.S. Energy Information Administration projects that U.S. net oil imports in 2019 will be their lowest in more than 60 years. Such forecasts undergird the administration’s calls for U.S. “energy dominance,” which administration officials have defined as “a self-reliant and secure nation, free from the geopolitical turmoil of other nations that seek to use energy as an economic weapon.”
The need to call on the Saudis to stabilize oil markets in the wake of the Iran announcement, however, lays bare why increased oil production alone does not make the U.S. immune to the realities of the global oil market. As oil can be freely traded, there is, broadly speaking, one world oil price. A disruption to supply somewhere in the world will thus cause oil prices, and consequently pump prices, to rise in the United States, even if it imports no oil at all.

Surely true, but I fail to see how that backs up your thesis. They are not suggesting that Trump is trying to sabotage US oil production or seeking to drive prices up.

Perhaps the gambit is to foster isolationism in order to burn off our reserves, but my money is still going to be on something more direct and catastrophic (at least in application), so that we are somehow either prevented from extracting sufficient quantities on our own or the access is somehow sabotaged.

Reality check: it is the ecomentalist Left who demand that oil be "kept in the ground".

We have 80% of the world’s shale oil resources,

Known resources perhaps. US is further ahead in exploration of this resource. Still, that's a whole lot of oil.

but somehow Trump is going to fuck with that or make some sort of deal that puts us on the losing end in regard to it. Words marked.

Care to make it interesting?

My money is on a predictable, catastrophic accident due to rescinding Obama’s regulations (and/or sabotage resulting in the same thing) and that accident being so devastating that everyone—Trump included—has no choice but to ban fracking. And the basis for that bet is the simple fact that there was no need to rescind the regs. The industry was, in fact, just fine with them and agreed to them as being necessary to help prevent catastrophic accidents.

To answer my question from further up, yes, you are paranoid much.

 

[Elixir]

Conservatives: this deal is a bad idea because Iran could start working on nuclear weapons again in 10 years!

Also conservatives: therefore, let's destroy the deal so that Iran can start working on nukes right away!
we can claim Iran is making a nuke and bomb the piss out of them.
No one rational makes arguments this bad. It's obvious they don't want to talk about the real reason they don't like the deal. Party before country!

I've corrected it for you.

Actually, Trump hated the Iran deal because it was bad for Russia.

 

[Koyaanisqatsi]

Paranoid much?

It’s not paranoia when you’re right.

By the way, it’s 2018, not 1987. You can update your vernacular. It’s ok.

 

[Jayjay]

Conservatives: this deal is a bad idea because Iran could start working on nuclear weapons again in 10 years!

Also conservatives: therefore, let's destroy the deal so that Iran can start working on nukes right away!
we can claim Iran is making a nuke and bomb the piss out of them.
No one rational makes arguments this bad. It's obvious they don't want to talk about the real reason they don't like the deal. Party before country!

I've corrected it for you.

Actually, Trump hated the Iran deal because it was bad for Russia.

If the deal was bad for Russia, why was Russia part of it in the first place? The deal allowed Russia to sell nuclear technology to Iran without fear of sanctions, among other things. The oil prices are just one part of the equation.

I think it's fairly obvious that it's Bibi and Bolton who have Trump's ear on this issue.

 

[Elixir]

Actually, Trump hated the Iran deal because it was bad for Russia.

If the deal was bad for Russia, why was Russia part of it in the first place? The deal allowed Russia to sell nuclear technology to Iran without fear of sanctions, among other things. The oil prices are just one part of the equation.

I think it's fairly obvious that it's Bibi and Bolton who have Trump's ear one this issue.

Yeah, it served Putin well at the moment, and now, having the US leave the deal serves Putin even more "well". Of course it will require Trump to stay in power for a while in order for Putin to fully realize the gains that are only on paper right now. Facebook/Twitter/Instagram should be quite interesting this fall.

 

[Derec]

It’s not paranoia when you’re right.

Again, care to make it interesting? $100 bucks says Trump will not ban fracking. How about it? Put your money where your keyboard is?

By the way, it’s 2018, not 1987. You can update your vernacular. It’s ok.

I would have, but this fit so well. Besides, it's old enough to be retro.

 

[Koyaanisqatsi]

It’s not paranoia when you’re right.

Again, care to make it interesting?

Gee, sure! Let's meet up at Popp's Chocklit Shoppe and get Jugghead to hold the money, because otherwise, I'd just be a coward with no conviction and you would win the interwebz!

By the way, it’s 2018, not 1987. You can update your vernacular. It’s ok.

I would have, but this fit so well.

It really doesn't, but my Archie bastardization is truly retro, so, fun. Now if you could make some sort of actual argument instead of this pointless bullshit just begging to be deleted, you can get up to speed.

 

[Copernicus]

Or perhaps you just didn't bother reading the links that koy posted:

Well, Koy is not a little paranoid. See post #38.

The ad hominem does not justify the fact that you commented without informing yourself. Koy's paranoia is not what drives your ignorance of the facts.

Doesn't change my point. You specifically linked rising gas prices "at the moment" with Iran deal collapsing, when in reality oil prices have been rising since the low in January 2016. Add to that the fact that we are in Spring, the time of year when gas prices traditionally rise due to refinery switch from winter to summer gasoline blend and people taking more road trips. So the current oil and gas prices are perfectly explainable without the Iran deal.

When you reduce the supply of Iranian crude, that makes the price of oil go up in the world market. Markets react. Gasoline prices go up. So does the price of delivering products to your local grocery store. Putin smiles. That would not be a "normal cyclic oscillation".

Current oil prices are due to normal cyclic oscillation of low prices reducing investment. Higher prices encourage investment, so that's where the cycle comes from. Nothing in current oil prices is indicative of anything more going on. That could change in the future, but right now it has no effect.

Derec, the recent spike in oil and gasoline prices that occurred after the announcement of our trashing of the Iran deal did not happen because of seasonal adjustments, however much you wish to believe that. Here is what I was talking about: Oil prices hit three-and-a-half-year high after US exits from Iran deal.

Now, you may wish to avert your eyes or stop reading the post, because I know you won't bother reading the content of that link. So here is an excerpt:

Crude oil prices rose to three-and-a-half-year highs following the news that the Trump administration revoked the nuclear deal with Iran.

Brent crude oil prices, the global benchmark, and US West Texas Intermediate rallied above $77 and $71 per barrel, respectively, in the aftermath of the announcement.

Why are oil prices soaring as US exits Iran nuclear deal?

The rise came after the treasury secretary, Steven Mnuchin, told reporters he did not expect a major oil price hikes because other countries would increase output to offset such losses.

Although Donald Trump’s decision to withdraw from the Joint Comprehensive Plan of Action was not a surprise, reinstating all US nuclear-related sanctions was more than expected, said Barclays analysts in a research note.

Bart Melek, global head of commodity strategy at TD Securities, said this announcement comes at a time where there are increased geopolitical tensions in the Middle East and global crude oil inventories are normalizing after being in a supply glut for the past few years. In the US inventory levels are now below the five-year average...

Now, it is possible that something will happen to mitigate gasoline prices. Maybe OPEC will increase petroleum output. Maybe not. Right now, prices are shooting higher, although they may not get to the $100/barrel level. As for investment in oil exploration, that is an unimaginably stupid and shortsighted thing to want in a world that needs to wean itself off of carbon-polluting nonrenewable energy sources. We don't need to make oil production more attractive. We need to look for alternative sources of energy and infrastructure investment in those sources.

 

[Derec]

Gee, sure! Let's meet up at Popp's Chocklit Shoppe and get Jugghead to hold the money, because otherwise, I'd just be a coward with no conviction and you would win the interwebz!

Even without a bet with me, if you are right you could clean up on the futures market.

Now if you could make some sort of actual argument instead of this pointless bullshit just begging to be deleted, you can get up to speed.

I made plenty of arguments in posts #30, #43 and #44. You ignored all these arguments in favor of making fun of my lingo.

 

[Derec]

The ad hominem does not justify the fact that you commented without informing yourself. Koy's paranoia is not what drives your ignorance of the facts.

I informed myself, so I am not ignorant of the facts. Go read my posts, especially #30 where I posted charts.

Derec, the recent spike in oil and gasoline prices that occurred after the announcement of our trashing of the Iran deal did not happen because of seasonal adjustments, however much you wish to believe that.

There was no spike in oil prices after the Iran deal announcement, just a steady rise that started in January 2016.

Here is what I was talking about: Oil prices hit three-and-a-half-year high after US exits from Iran deal.

Unless there is a shooting war, it is really not a big deal, as even Guardian recognizes

Even if some Iranian oil is off the market, Melek said there was capacity for members of the Organization of Petroleum Exporting Countries (Opec) to increase production to make up for the shortfall.
Before the White House announcement, oil traders expected Opec members and Russia to stick to their plan to continue reducing output into 2019, which has helped bring supplies and demand back into balance. That plan could be revisited at the next Opec meeting in June.
Plus there are the US shale oil producers which might make up for any shortfall. Jeff Klearman, portfolio manager at GraniteShares exchange traded funds, said he sees WTI prices holding in their recent range of $60 to $70, provided the strong demand from the EU and US continues, which may require prices staying around that level.

Crude oil prices rose to three-and-a-half-year highs following the news that the Trump administration revoked the nuclear deal with Iran.

Yeah, they reached new highs but because they were already on an upward slope. When prices increase from very deep lows multi-year highs are expected no matter what.

Brent crude oil prices, the global benchmark, and US West Texas Intermediate rallied above $77 and $71 per barrel, respectively, in the aftermath of the announcement.

Without Iran deal announcement they would have been around $77 and $71 respectively.

Why are oil prices soaring as US exits Iran nuclear deal?

They are not "soaring" since US exited the Iran nuclear deal. They have been steadily increasing for more than 2 years from a low of ~$30 for the WTI. That was the point of the charts I posted.

The rise came after the treasury secretary, Steven Mnuchin, told reporters he did not expect a major oil price hikes because other countries would increase output to offset such losses.

What rise? Show me the specific rise due to the Iran deal, after discounting seasonal and longer-term (i.e. recovery since January 2016) effects.

Bart Melek, global head of commodity strategy at TD Securities, said this announcement comes at a time where there are increased geopolitical tensions in the Middle East and global crude oil inventories are normalizing after being in a supply glut for the past few years. In the US inventory levels are now below the five-year average...

The bolded is the most important part. Also, the crisis in Venezuela means that their production has dropped because they have no money to invest in production and nobody sane wants to loan them money or invest in PdVSA.

Now, it is possible that something will happen to mitigate gasoline prices. Maybe OPEC will increase petroleum output. Maybe not.

Personally, in shale I trust.
U.S. Shale Oil Production Rises At Record-Breaking Rate

Right now, prices are shooting higher, although they may not get to the $100/barrel level.

They are not "shooting higher". That Guardian piece was written a week ago. Right now, WTI is $71.06 and Brent is $78.19, barely different than what was written in the piece.
And yes, it is unlikely they will reach $100/bbl, even for Brent, anytime soon.

As for investment in oil exploration, that is an unimaginably stupid and shortsighted thing to want in a world that needs to wean itself off of carbon-polluting nonrenewable energy sources. We don't need to make oil production more attractive. We need to look for alternative sources of energy and infrastructure investment in those sources.

I agree that we need to invest in alternates, but that will take decades even under optimistic scenarios. Electric cars are getting better and cheaper, but are still a big ask for most drivers both in terms of cost and practicality. Hence only ~1% of cars sold in the US being BEVs. And aircraft engines are not going to run on batteries. So we will need significant amounts of oil for at least the next few decades.

You do not have to invest in oil production only if you want to increase it. You have to invest billions just to maintain constant production (something the Boligarchs in Venezuela neglected when they raided PdVSA investment funds). Wells get depleted, so new ones have to be drilled. Secondary and tertiary recovery must be implemented - even Saudi Arabia uses fracking on their ageing conventional oil fields to maintain production levels. And as whole fields get depleted new fields must be discovered and developed.
It is like the Red Queen in Through the Looking Glass, "it takes all the running you can do, to keep in the same place."

 

[Harry Bosch]

Well, it appears to me the rest of the world is just moving on. It's just that the US won't be involved in the deal anymore. The real issue is whether or not Trump will start boycotting EU companies trading with Iran. If so, a large trade war will erupt, and that will probably throw us into a recession. Sorry for derail, but there are two factors that could throw us into deep recession: tight labor supply and trade war. Trump is bringing us to the brink on both.

 

[funinspace]

Well, it appears to me the rest of the world is just moving on. It's just that the US won't be involved in the deal anymore. The real issue is whether or not Trump will start boycotting EU companies trading with Iran. If so, a large trade war will erupt, and that will probably throw us into a recession. Sorry for derail, but there are two factors that could throw us into deep recession: tight labor supply and trade war. Trump is bringing us to the brink on both.

Yep that is a key question. Russia and China will already do their best to ignore the US sanction demands. If FFvC's administration doesn't punish EU companies for dealing with Iran, then the US sanctions will be nearly 100% toothless, except to block US companies out of trade (MAGA?). Obviously, EU companies will be nervous for a while. But if FFvC just takes a victory lap and moves on, then they will start making more deals again. Then again, El Cheato's pack of dogs have Yuge hard ons for punishing Iran, so it is really hard to tell what will come next...

 

[jonatha]

EU moves to block US sanctions on Iran

The European Commission will launch the process of activating a law that bans European companies and courts from complying with US sanctions against Iran after Washington pulled out of the landmark 2015 nuclear deal. ... "We now need to act, and this is why we are launching the process to activate the 'blocking statute' from 1996."

 

[Derec]

Yep that is a key question. Russia and China will already do their best to ignore the US sanction demands. If FFvC's administration doesn't punish EU companies for dealing with Iran, then the US sanctions will be nearly 100% toothless, except to block US companies out of trade (MAGA?). Obviously, EU companies will be nervous for a while. But if FFvC just takes a victory lap and moves on, then they will start making more deals again.

EU has only wanted to be able to trade with the Mullahs. They did not care about nuclear weapons or Iranian support for terrorism. That's why they pushed for the deal as weak as it is. Unfortunately, Obama went along with it. Even more unfortunately, once the deal is done, it is difficult to scrap it. And most unfortunately of all, even though Trump is right about Iran, his administration is highly incompetent and hardly capable to dealing with this issue.

Then again, El Cheato's pack of dogs have Yuge hard ons for punishing Iran, so it is really hard to tell what will come next...

For good reason. Appeasing the Mullahs will turn out to be about as effective as appeasing Hitler was.