Price impact of Iranian oil uncertain, says US official
In an interview with Al-Monitor, Amos Hochstein, special envoy and coordinator for International Energy Affairs at the US State Department, says Middle Eastern countries are increasingly investing in renewables, international oil companies are returning to Egypt and Israel needs get its regulatory house in order if it wants foreign investments in offshore natural gas.
WASHINGTON — One of the Barack Obama administration’s top energy officials says it is difficult to predict the impact on the world oil market of recovering Iranian exports in the event of a nuclear deal. Amos Hochstein, special envoy and coordinator for International Energy Affairs at the State Department, told Al-Monitor in a recent interview that the impact of a deal on world oil markets depends on a number of variables that are difficult to predict at this time, including US oil production.
Over the past few years, Iran’s oil exports plunged from 2.5 million barrels a day to about 1 million barrels, in part because of US sanctions that limited exports to key customers. Another factor was a sharp decline in foreign investment in Iranian fields, also a result of US sanctions. Those export and investment restrictions are expected to be substantially eased under a comprehensive nuclear deal. European and Asian oil company executives have been visiting Iran in large numbers.
Questions about the impact of increasing Iranian oil exports on prices are hard to answer, according to Hochstein. “Anybody answering that question can’t make any real predictions because they won’t know what the scenario will look like,” he said.
“We’re in a dramatically different oil market today than we’ve been for many decades,” Hochstein asserted, in large part because of the sharp rise in American production. “There is no central control over the level of [US] production,” he said. Instead, independent decisions are made by “4,000 companies operating in the unconventional” sectors, including shale oil and gas, he explained. That diminishes the ability of the Saudi-led Organization of Petroleum Exporting Countries to affect prices by reducing production. “Saudi Arabia and OPEC are smart, savvy and experienced,” Hochstein said. “They know what didn’t work in the past, and they’re not trying to do it now.”
