In a remote corner of Iran, engineers are working round the clock to return the country to the top ranks of global oil producers.
The region of Southwest Iran boasts more proven reserves of oil than Africa’s largest producer, Nigeria, and its 60 billion barrels are central to Iran’s ambitions.
Iran’s oil industry has had to get creative to survive years of isolation — the equipment is old, rusty and in some cases improvised. On one platform, the National Iranian Oil Company is using a Chinese built rig but with American technology at the core purchased before sanctions took hold.
Iran is about to start selling oil that may cost just $1 a barrel
Iranian Oil Minister Bijan Zangeneh at his hotel before a meeting of OPEC oil ministers in Vienna on December 3.
Today, oil sits at $37 a barrel. Goldman Sachs recently agreed it could tumble as low as $20 a barrel, a level that would decimate the already heavily damaged economies of Saudi Arabia and Russia.
The world is awash with oil. Everyone expects it to stay that way for decades. OPEC predicts the price won’t go back above $100 until 2040.
This week, Kaletsky has a new suggestion for oil-watchers to consider: Iran may be able to produce oil for just $1 a barrel, he wrote in a recent column (emphasis ours):
ExxonMobil, Shell, and BP can no longer hope to compete with Saudi, Iranian, or Russian companies, which now have exclusive access to reserves that can be extracted with nothing more sophisticated than nineteenth-century “nodding donkeys.” Iran, for example, claims to produce oil for only $1 a barrel. Its readily accessible reserves — second only in the Middle East to Saudi Arabia’s — will be rapidly developed once international economic sanctions are lifted.
For comparison, it is widely believed that Saudi Arabia’s production cost is $10 to $20 a barrel, according to Quartz.
As China becomes the world’s largest oil importer, who will patrol the Middle East sea lanes? How will geopolitics shift? Above, a Chinese oil tanker similar to the vessels that China has been providing to Iran.