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.
I’m quite pleased to be ignoring the deal completely. At a guess I’d think it wasn’t terribly good for the US because I don’t think the US negotiating team is competent. But I also think it probably doesn’t matter. If NKorea & Pakistan could make The Bomb, Iran probably will build one too, if they so desire, regardless of any diplomatic & economic pressure we bring.
So I’ve decided on a course of personal indifference. It’s quite good for avoiding stress over events I can’t influence anyway.
@Icepick
… I don’t think the US negotiating team is competent. …
If @Dave Schuler is correct (domestic politics), it will depend upon the president’s poll numbers.
Actually, the goal of any negotiations may not be a deal. There could be a goal not related to the immediate task. The Iranians are not the only ones who can use the negotiations to mask other actions. There may be some sabotage being conducted, and they need the Iranians complacent, or they might want to impress Pakistan.
Unfortunately, I suspect this administration thinks a cigar is a cigar. Unless, Barry has rolled a “phat assed J”.
Might be terrible, but if America has given up on being a superpower, better that it is known and other countries can make plans accordingly.
Nuclear weapons are an old technology, man, older than me. The Saudis and Kuwaitis can buy the technology from Pakistan. Australia, Japan, South Korea can do it on their own. Hope Poland and the Baltic republics can pull it off before Putin invades. Germany, ah, Deutschland, I am guessing you crazy bastards have a few in the works.
Thanks, Obama!
A multipolar world, less stable, less peaceful. Less American. Thanks again, Obama, for transforming the world.
Dave, why would Iran be that desperate to sell oil? Surely not for foreign exchange…Obama took care of that nicely. <a href="http://joshuapundit.blogspot.com/2015/07/breaking-sordid-details-of-munich-ii.html"They received billions in 'sanctions relief' before the deal was even signed simply for the privilege of talking to them, including 13 tons of gold.
Together with the other $150 billion they’re due to receive, funding Islamist terrorism, the revamping of Iran’s armed forces and their nuclear weapons program will be assured for quite some time.
And because our Dear Leader destroyed the sanctions, foreign countries are rushing to Iran to do deals which will enrich this fascist regime further. That includes new oil technology from the west and the latest new centrifuges.
Our president killed three birds with one stone. He screwed over Israel, screwed over America and ‘put it in it’s place’ and ensured that the mess he created in the Middle East will come back to bite us badly after he’s safely out of office….after which the media will protect him just as they did Bill Clinton after the results of his asinine deal with North Korea became known .
Only this will have far more consequences for us than North Korea. Just watch.
Sorry, here’s the proper link for the above comment :
http://joshuapundit.blogspot.com/2015/07/breaking-sordid-details-of-munich-ii.html
You can’t read any business publication these days without falling over the claim that Iran’s oil will be coming into the market, presumably with the effect of either pushing prices lower or keeping them low. But since Iran loses money for every drop sold in the present market that’s irrational. That leaves us with only a handful of viable explanations: either they’re desperate for the foreign exchange or they’re crazy. Given present market conditions and the lousy state of Iran’s oil industry they’d be better off leaving the oil in the ground.
So, are the Iranians going to start selling oil or not?