Monday November 14, 2016

I've Been Thinking:

Iran is once again violating their OPEC agreement.

This is upsetting Saudi Arabia more than anyone else. Iran is a member of OPEC and has agreed to their production quotas.

The purpose of the production quotas is to keep the price of oil as high as possible without creating a crisis that would stimulate research for new alternatives to fossil fuels.

Iran has begun producing about 250,000 barrels from the Karoun River valley, up from 65,000. President Rouhani says that productions in the valley should reach 1 million barrels per day --- ASAP. "Oil production west of Karoun must reach one million barrels per day," Rouhani said, referring to the North Azadegan, Yadavaran and Yaran fields. "This is a realistic goal, and we need investment and technology."

This will be a massive change in Iran's production. There is no doubt that the increase in oil production will have two effects. More cash will flow into Iran and the price of oil will drop.

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