Iran sanctions: Middle East stock markets crash as Tehran enters oil war

[MowCowWhoHow III]

Source: Telegraph

Prospect of the Islamic Republic pumping an additional 500,000 barrels a day sends stock markets in Dubai and Saudi Arabia into tailspin

Stock markets across the Middle East collapsed as the lifting of economic sanctions against Iran threatened to unleash a fresh wave of oil onto global markets that are already drowning in excess supply.

All seven stock markets in Gulf states tumbled as panic gripped traders. Dubai's DFM General Index slumped 4.8pc to 2,682.56, while Saudi Arabia's Tadawul All Share Index collapsed by 7pc to 5,409.35, its lowest level in almost five years.

The Iranian stock index gained 1pc, making it one of the best performing markets in the world with gains of 6pc since the start of the year.

Read more: https://uk.finance.yahoo.com/news/iran-sanctions-middle-east-stock-102835505.html

[pampango]

1. "The dramatic moves came following the historic report from the UN nuclear watchdog, which showed

that Iran has met its obligations under the nuclear deal, clearing the way for the lifting of sanctions. The Vienna-based International Atomic Energy Agency issued the landmark document late on Saturday (Shenzhen: 002291.SZ - news) evening, sparking mayhem as markets opened in the Middle East.

Oil prices fell below $30 for the third time last week as traders prepared for the prospect of Iranian oil flooding global markets.

The Islamic Republic has vowed to return its oil production to pre-sanction levels, with estimates suggesting Tehran will add a further 500,000 barrels a day (b/pd) to the world's bloated stockpiles within weeks. Fears that the Islamic Republic could quickly ramp up production sent Brent crude falling by 3.3pc to $29.43 - matching lows last seen in 2004.

Oil has shed more than 75pc since last summer - a post war record - as over-supply and fears over global economic growth has depressed traders. * Oil price crash means petrol could become cheaper than bottled water

[Tab]

4. Their intent may not be malicious

They've been restricting oil because of sanctions, which I think is 15% of GDP. Being able to up their output (even if the price falls) is one of their few options to bring in money real quick, even though the rest of the market might suffer.

[Cosmocat]

2. Meanwhile, gas is $1.99

in some areas close to us, the first time gas prices have been below $2.00 since the last 90s here.

[Tab]

3. Yeah, we run $1.87 to $1.99

Depends on location, market, source, and also each state has different taxes leveed.

The big question is, how much is gas at the big station nearly Disneyland where everyone gasses up to return their cars? That often was the leader in the nation in high gas prices.

[postulater]

5. I paid $1.69 yesterday. It's been $1.89 lately though.

[leftyladyfrommo]

6. $1.64 in KCMO this am.

It was $1.59 in North Kc.

[beemer27]

10. Gas in NE Oklahonma

I paid $1.399 when I fueled up yesterday. With the price of crude where it is, we should be paying under a buck a gallon.

[Duckhunter935]

26. you noticed

[daleo]

7. I can see the world shifting to renewables

Just to get off the roller coaster that is oil - rapid manipulated price swings, induced recessions, wars, terrorism, refugees, financial support for evil dictatorships...oil is looking more and more like a cursed energy source, especially within a global capitalist paradigm. That's without even mentioning global warming.

[Victor_c3]

12. I believe everything you said is a reason why we should switch to renewables

but I don't think we'll make the shift to renewables until inflated oil prices make it economically viable to do so. Too many people are focused on the short term gain and the impact decisions have on themselves than on seeing the big picture and realizing removing our dependence on oil and some not-so-nice regimes would make the world a better place.

I also believe that the major motive that moved OPEC to lower oil prices is to slow to rate at which renewable energy is being developed. As soon as Saudi Arabia and the rest of the countries mean nothing to us then we'll drop our support for nasty regimes and they'll crumble - and they know that. They are trying their best to hinder the inevitable.

[Orangepeel]

23. Depends on who is doing the investing

Inflated oil prices give energy companies a reason to continue investing in oil and fighting a switch to anything else. If oil prices keep falling, they may have more of an incentive to commercialize (and patent) technology to harvest renewable energy cheaply.

[paleotn]

33. Agree....

....it appears OPEC and the Saudis are delaying the inevitable as long as possible. I just worried about the collateral damage in the mean time while all this plays out. The potential for massive volatility in oil markets and all the damage that entails.

[BumRushDaShow]

8. This is an illustration of a major geo-political event.

After years and years of rampant speculation, and price manipulation (often cut off from actual supply and demand pricing) OPEC burst the bubble to focus on torpedoing U.S. producers, but then I doubt they anticipated what would ulimately happen with Iran (let alone us lifting our own export ban). The NY Times had an interesting story back in 2008 about the state of affairs then and this chart -



Since then we have -



We've basically come full circle from 1979 (in terms of an Iran impact)... It will be interesting to see what commodity they flee to for the short term (spam from gold vendors has started showing up again) and how this will impact Russia. Of course a reversal of China's economy could reverse this in an instant.

I know I've seen DUers bemoan that "people will now buy bigger cars"... yadda yadda. But I would think the difference is that the U.S. DOES have new vehicle CAFE standards put in place by this administration averaging 34.1 mpg for both consumer-oriented vehicle types, that are required to be in place by this year (which includes passenger cars & light trucks, although we know all kinds of voodoo happens with the determinations.. but at least some improvements are occuring).

As a side note (hadn't kept track), I notice that today, the dollar is close to parity with the Euro (0.92).

[cindyperry]

9. Gas is 1.58

Here this is what they are angry about not that no shots fired prisoners released a nuclear agreement gas has dropped so low is what they hate

[rafeh1]

11. Its obamas fault

I assure u

[Lodestar]

13. Saudi Oil Strategy regarding Russia

Saudi Arabia's Oil War With Russia

http://www.bloombergview.com/articles/2015-10-16/saudi-arabia-s-oil-war-with-russia

As a Russian partner, I'm not sure what role Iran is playing in this game, but clearly it's hurting the Saudis as well as Russia.


Oil Wars 2016 - US vs Russia vs Saudi Arabia vs Iran

The oil price collapse is having a devastating impact on ALL of the worlds major oil producers as it's not just a case of what is the break-even price but the price necessary to finance government budgets that are now in deep deficits which has been triggering increasing global instability as the price has slid to $30. In fact the budgets of virtually every major oil producer requires an oil price north of $80 just to break-even. With several such as Russia requiring $100+. Furthermore the oil price slump of 2015 has played a large part in sparking economic mass migration out of African oil producers such as Nigeria whose government requires an oil price of $120 to balance it's budget.

http://www.marketoracle.co.uk/Article53690.html

[loudsue]

25. Better now than later, when the oil goes away.

There IS a finite supply of oil, and it is time for the entire planet to look forward, and quit bemoaning the loss of gouging the average working stiff with the price of oil.

It's a new world, and we all have to learn how to make things WORK, and quit trying to sing the same old song over & over & over for the next 50 years.

Economies need to CHANGE, just like individual's economies are changing: just ask the 15 million young people living with / off their parents.

We are ALL having to change.

[Yupster]

45. Remember just a few years ago how we were all talking about

Peak Oil !!

Has there ever been a prediction worse than that one?

Now we have a worldwide glut and decades of production that hasn't even been gone after yet.

A good warning to us all that sometimes predictions just aren't wrong, they're laughable just a decade later.

[Lodestar]

14. I haven't been sure what would be the final death blow to oil

that would make room for diversified renewables market growth, but this sure looks like one solution to that issue. I relatize there are purposeful strategies by various players in this global 'oil war' but the end result may just be the end of oil as we've known it.

[FailureToCommunicate]

15. Thanks Obama

(No, really THANKS!

And John Kerry and the rest of the diplomatic team!)

Suck it Saudi Arabia.

[roamer65]

16. $10 a barrel very soon.

I think we will be below $20 a barrel shortly.

This oil war is absolutely devastating OPEC economies. Not good.

[Spitfire of ATJ]

21. Cheap oil from Iran ends tar sands oil from Canada.

[paleotn]

24. Yep. It makes it damn difficult for them to stay in business....

...they're sucking wind at $40 oil. At $20? Potential Armageddon. The threat of massive defaults by tar sands and the frackers scares the hell out off me. Not that we haven't had mass industry defaults before, but the financial system is so much more complex now since Big Finance has issued derivatives on everything from oil production debit to my granddaughter's allowance.

[enid602]

27. Canada

And 60% of Canada's bank assets are in the hands of the top 5 banks, vs only 45% here in the US.

[paleotn]

34. Bad news for them .....

but could still be bad news for us as well. Use to be a few companies or maybe a signficant part of an industry collapses. A few financial institutions get crushed. FDIC moves in (or the Canadian analog). Government cleans up the mess and the systemic damage is mostly contained. After 2007 / 2008 we've discovered it's not like that anymore. The financial interconnections may make it difficult if not impossible for even rich nation states to contain the damage.

[Spitfire of ATJ]

29. We used to call all of that a "paper fortune"....

Many are one margin call away from ruin.

[paleotn]

35. Yep. Scary stuff. (nt)

[Sunlei]

40. tar sludge not worth the drilling costs is wonderful. & so much USA crude we are now exporting dom

we are now exporting USA domestic oil for the first time ever.

It's a very good thing the USA is not one of those several countries whose entire economy is based on crude oil exports to survive.

I really want to thank Obama who allowed/required USA drilling to proceed on leased private lands (use your oil lease or lose the lease) and handed me the $200 a month savings on gasoline prices.

A direct cash infusion to the citizens of America with the savings on gasoline prices.

[NCarolinawoman]

43. I don't like the idea of drilling in the Atlantic ocean.

What's worse is the seismic testing that will precede it. Whales and dolphins will lose their ability to communicate. I will be very painful. Many or most will die. It will affect every sea creature out there.

[Spitfire of ATJ]

44. Truck drivers should be thrilled too....

Sadly many are into the whole 'shit kicker/hate Obama' thing.

[L. Coyote]

46. Puts the brakes on fracking too.

Not that those billions aren't already reaped at $100 a barrel.

[Spitfire of ATJ]

47. Fracking is often for gas.

[L. Coyote]

17. The price of peace in the Middle East, Clinton-era gas prices $1 gallon.

So, add up all the money the world has spent on gasoline in excess of one dollar a gallon since Clinton's presidency, and you have the cost of Bush stealing the White House.

[Yavin4]

18. You've just posted the reason why we had the war in Iraq. n/t

[joshcryer]

42. +1

Add in the cost of the Iraq war too.

[modrepub]

19. Duh

With Iraq and Iran getting back into the oil market and Saudi Arabia desperately trying to keep market share coupled with China's go for broke growth fetish finally catching up with itself it's no wonder there's an oil glut and price collapse. Now we'll see if the big energy companies can figure out how to get the government to bail out all their bonds the floated for uneconomical oil plays. Oh, don't forget the fed raising rates making the cost of any additional borrowing more expensive.

[Sunlei]

41. millions more 8 year car loans to go- before every single American is in debt over new cars.

[Spitfire of ATJ]

20. Once again, Wall Street is the only place where gas prices falling is "bad news".

[bemildred]

22. Definitely Obama's fault. nt

[dembotoz]

28. just because gas is cheap today does not mean we should go out and buy big gas hogs

lets not get stupid....again

understand work trucks like farming and construction etc but cheap gas today does not mean cheap gas on monday

[paleotn]

32. +1000 (nt)

[AwakeAtLast]

48. I'm hoping that lesson has been learned

One thing about our economy, many people still need to save as much as possible, and the lower gas prices help.

[Kennah]

30. I would expect this to be very damaging for ISIL n/t

[Dr. Strange]

39. Let's hope!

[paleotn]

31. God, I'm such a contrarian.....

....my spouse thinks I could find fault in nirvana or the second coming of Jesus. Sorry, but I get paid to worry. And I've got a sneaking suspicion we're setting ourselves up for one hell of an oil shock and years of extreme volatility. Our economies become use to cheap oil, get shocked by price spikes, drop into recession, oil prices plunge again, rinse and repeat. It's a market aberration, and the long term damage may well offset any short term gain.

- At $20 to $30 damn near nothing is profitable to pump for anyone. I'm no lover of the big oil, but the systemic damage this could cause in the industry may be with us a lot longer than cheap gas. Unfortunately, our economies are still from top to bottom petroleum driven.

- Can Saudi keep pumping at max capacity for the foreseeable future? No. They're wrecking their economy as it is and God knows who will take over if the Saudi's are driven from power.

- Capital expenditures throughout the industry are drying up, and you just don't turn this on and off like a light switch. This could set back the ability to meet future demand by years. Maybe a decade. Maybe more. Particularly today when most oil extraction requires significant technology and big dollars in cap spend.

- It sets back the deployment of renewables meant to replace fossil and get us out of this mess..

- What happens when demand begins to increase and the existing short term capacity no longer exists to meet it? Price shock.

- Will Finance take these structural changes in stride? Hell no! They will run to and fro like sheep and exaggerate the underlying supply / demand dynamics and we'll be looking at $100+ oil again during the peaks. Ouch!!

[hollowdweller]

36. So this cuts down on money that they can give to terrorists plus makes Russia poorer

At the same time consumers get huge savings.

What a great economic and political move by Obama.

[paleotn]

37. Obama didn't have anything to do with it....

....His admin is just a part in a much bigger game. Impacts on ISIS are a possible short term upside. A poorer Russia is worrisome. I like a nuclear armed Russia nice and stable.

[Sunlei]

38. Middle East almost free gasoline isn't a good idea anymore.

They could always start-up New Drug Corporations and compete in the market for lower medicine prices.

Drug Corps need some good old fashioned price wars.