Jan 6, 2017

Iran is holding a fire sale on oil as OPEC cuts production

Iran has nearly halved the amount of oil it has been forced to hold in tankers at sea, thanks to the end of nuclear sanctions. Now it's capitalizing on the November OPEC deal to cut oil production by 1.2 million barrels a day.

Why this matters: Iran is OPEC's third biggest oil producer, and it got off easy during the OPEC deal so it can rebuild its economy. But if it floods the market with stored oil, it will dampen OPEC's aim to boost prices.

And they're already doing it: Industry sources said Iran had already been offering discounts to buyers, and convincing them to stock up for winter in anticipation of the OPEC cut.

Why Americans should care: U.S. shale gas producers will also benefit from OPEC cuts, as rising oil prices resulting from the cut will make more of their operations profitable.

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