In reaction to news of U.S. airstrikes on Iran’s nuclear facilities, Al Salazar, director at Enverus Intelligence® Research (EIR), released this statement explaining the significance on oil prices:
“The U.S. first accused Iran of attempting to make nuclear weapons in December 2002. Since then, Iran’s pursuit of nuclear arms has caused deep bouts of insecurity and concern for the Middle East.
In terms of oil markets, Iranian oil supply has been targeted over the past two decades by Western sanctions. Meanwhile, Iran has always had its “pinch-point” of last resort – the Strait of Hormuz – should the country decide to exert maximum oil supply leverage against its foes. The above can be described as ever on-going “strings-attached” or conditions to Iranian oil supply.
With President Trump’s attack on Iran’s nuclear facilities, it appears the country is no longer a nuclear threat, but what about the conditions on Iranian supply?
Enverus Intelligence® Research reaffirms its position oil prices will naturally have a bullish knee-jerk reaction to such instability. If there is no material and extended loss of supply, the bullish enthusiasm will fade. Conversely, should there be “a pinching of the oil trade” in the Strait, quick military intervention seems certain to solve constraints and possible shipper concerns. It is never in greater global interest for oil to be priced at ~$150/bbl or higher.
There is no disputing the near-term bullish risk. However, EIR suggests such developments bring a less-discussed bearish skew to medium- and long-term oil prices: stable Iranian supply. With the strikes this past weekend, the need to further sanction Iranian oil has diminished. Furthermore, the possibility of a regime change could eventually subdue the geopolitical risks that have plagued the country’s production for decades. One needs only to look at Iraq, Iran’s neighbor, for a salutary lesson about the impacts of a change in governance. That country’s production has expanded ~3 MMbbl/d over the same ~20-year period since the U.S. and allies ended Saddam Hussein’s reign.”
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About Enverus Intelligence® Research
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers, and more than 40,000 suppliers. Learn more at Enverus.com.
