I don’t have much to add to the volumes being written, pro and con, about President Obama’s incipient deal with Iran. I have noticed one thing that has gone unremarked upon so I’ll point it out. Most commentators seem to believe that as soon as sanctions are lifted Iran will begin selling oil. What hasn’t been pointed out is that the present price of oil (just over $50 per barrel) is significantly above, a multiple of Iran’s production cost (over $130 per barrel).
Or, in other words, Iran’s profit-maximizing strategy requires the price of oil to go up or, failing that, for Iran to leave its oil in the ground until it is able to produce oil at a lower cost.
That in turn leads to two observations. First, if Iran sells oil at all it means that it’s absolutely desperate for foreign exchange. And, more disquietingly, expect Iran to foment instability in the Middle East. Stability is bad for business.