Oil bears calling Iran’s bluff… or are they playing with fire?
Headlines out of Iran are as bullish as ever. A country that sits atop 1 in 10 barrels of the world’s proven crude oil reserves has reportedly started its first nuclear reactor… for peaceful purposes of course (wink, wink, nudge, nudge). Meantime, over the weekend the country unveiled a long-range drone (“Karrar”) which is designed to, as Reuters reports, provide Iran with “…the ability to make pre-emptive strikes against a perceived threat…”
However, the most troubling news that broke last week was that Iran’s gasoline imports for August might have dropped by half from the previous month and is down by 90% compared with year ago. The drop in imports is a result of U.S. and E.U. sanctions that are designed to persuade Iran from pursuing its nuclear ambitions.
Thanks to geographical dumb-luck, Iran is situated over a significant amount of the globe’s easily obtained oil, but owing to ideological obtuseness it is still a backwater. Iran might be on its way to developing nuclear technology (and then weaponizing it), but it still cannot even refine enough of its own crude oil to sate internal demand.