After what Israel calls a historic mistake the Iran nuclear deal really could open up a new front in the OPEC production war. We know that OPEC's main reason for flooding the market was to try to defend market share from the upstart U.S. shale producer. But the potential return of Iranian oil may actually turn OPEC's production war away from the United States and focus on Iran.
Meanwhile, OPEC normally has an agreement to adjust production when a member is unable to produce and subsequently comes back. Yet, Saudi Arabia, having just increased its production to a record 10.56 million barrels a day, may not want to give back that hard-earned market share so easily.
Of course, that may be a moot point until we actually see just how much oil Iran can bring onto the market. We know Congress gets 60 days to review the deal and it is understood that before Iran can sell some crude oil they will have to show proof of compliance to agreements.
Sanctions have taken their toll on Iran's oil fields and boasts that they could add an additional 1 million barrels of oil a day might not be true. The Energy Information Administration, as reported by Dow Jones, said that Iranian exports averaged 1.4 million barrels a day in 2014, down from 2.6 million barrels a day at the end of 2011. Iran desperately needs help from outside oil companies. It could take more than a year to hit that million barrel mark.
Besides, sanctions on Iran will remain in place at least until United Nations monitors report on the nation's compliance with the deal in December, diplomats involved in the talks said to Bloomberg News. The International Atomic Energy Agency will issue a report by Dec. 15. The European Union will lift its sanctions once Iran has met its nuclear obligations, according to the diplomats. So, in other words, despite the selloff there is no new oil on the market yet, and while the outlook could weigh on the global market there are still many questions to answer. I think we may be a bit ahead of our selloff. We saw a big drop in products as well, and we may have seen a seasonal peak on prices for natural gas.
Corn prices are easing on a drier outlook, but not beans. A lot of rain damage along I57 and I 65. Many of those beans are not coming back!