Current BHI Stock Info

Iran will add to the glut, but not right away
Oil markets were closed last Friday, but prices fell in electronic trade after reports of a framework Iranian nuclear deal raised concerns of added supply to an already over-supplied market. Prices were back up today with analysts estimating that Iranian crude exports could take several months to ramp up significantly.

Iran’s Foreign Minister, Mohammed Javad Zarif, said on Saturday U.N. sanctions would be lifted immediately after the deal, but the United States released a fact sheet on Thursday ...

Analyst Commentary

Global Hunter Securities, Richard Hastings 04.02.2015
The US Department of State ("DoS") this afternoon announced that "significant progress" has been made in discussions between the P5+1, the EU and Iran. There is no firm, final agreement at this time. There is a revised timetable to achieve that goal, pushing the rest of these discussions out to June 30. We emphasize that the DoS announcement is clear, that "Important implementation details are still subject to negotiation, and nothing is agreed until everything is agreed." There remain risks that a signed conclusion may not occur on that timetable, despite great efforts by the Obama Administration to achieve a signed deal. We discuss briefly our conceptual perspective on an Iran easing and what this means to the current paradigm in crude oil. Lack of future conformance would result in a "snap-back" of all sanctions. In a nutshell, a successful departure from sanctions could make Iran a corollary to the US in displacing crude oil flows from their prior, established directions. But more compelling is the chance that the US and some of the EU are looking around the corner at Iran's natgas story as a proxy to push Russia further into a corner.

Capital One Securities, Luke Lemoine 04.06.2015
Iranian uncertainty continues to impact the crude market this morning as questions remain as to how long it will take Iran to increase production once the agreement is finalized. WTI is up 212 bps and back above $50 this morning, and Brent is trading at $56.25. Any changes in production for Iran will likely not have any impact on the market until 2016 as many additional steps will remain after reaching a deal.

KLR Group, John Gerdes 04.06.2015
Last Thursday, Iran and the P5+1 countries agreed to a framework that will allow Iran to increase crude exports in exchange for restrictions on its nuclear development program. The parties expect to agree on a formalized plan in late June. Assuming a formalized agreement, we expect Iran to increase crude output by ~0.6 Mmbpd through 1H/16 assuming estimated productive capacity is ~3.4 Mmbpd. Our assessment of Iran’s productive capacity assumes minor erosion from demonstrated capacity of ~3.5 Mmbpd in late ’11. The increase in Iranian production is largely negligible to our fundamental oil market outlook given a larger-than-anticipated decline in the U.S. rig count.

UBS Investment Research, William Featherston 04.06.2015
Sanctions have reduced Iranian imports from 2.5 MMBbld in 2012 to 1.1 MMBbld currently. Assuming a final agreement in June, sanctions could be lifted in phases within 4-12 months as Iran complies with terms of the deal. In addition to ~30 MMBbls of floating storage that could be sold, the IEA believes Iran could produce 500-800 MBbld within months of lifting sanctions, adding to a market already oversupplied by ~1.5 MMBbld. Wood Mackenzie projects a more modest 120 MBbld growth in 2015; 300 in 2016; and 250 MBbld in 2017. The lifting of sanctions will only extend what we had expected to be an already slower than normal recovery for oil prices.  


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