Iran coming to the market could be the “mother of all bears” for Nigeria.

Starting from Dec. 15, the U.S. and the EU will allow any nation to buy Iranian oil, and curbs on trading its refined products, chemicals and natural gas will be eased if the UN inspectors are able to verify its compliance with laid out terms.

Then, the oil-rich nation will be allowed to ramp up energy exports, re-enter the global financial system and access as much as $150 billion in frozen assets.

Why and how does this affect Nigeria?

One: prices will plummet if the current global growth and demand dynamics persist.

Two: more importantly, Nigeria’s share of the market will shrink even further.



Iran’s massive output capability will tilt the balance of global oil supply:

Here is a refresher on Iran and world oil:

The first crude deposits found in the Middle East were discovered in Iran in 1908.

Proven oil reserves in Iran was ranked 3rd largest in the world as of 2007, accounting for roughly 10% of the world’s total proven petroleum reserves and 13% of OPEC reserves.

Iran is the second-largest proven natural gas reserve holder in the world, behind only Russia. It holds 17% of the world’s proved natural gas reserves and more than one-third of OPEC’s gas reserves

Despite the paucity of investment in new exploration during the sanction years, it still occupies the position of 4th largest crude reserve holder in the world.

Iran’s oil reserves are estimated at 157.8 billion barrels, enough to supply China’s insatiable demand for more than 40 years.

To understand the scale of this size, even if no new oil was found, Iran’s current reserves could last for 98 years!

The country is also capable of producing 6 million barrels per day, three times larger than Nigeria’s historic peak production of about 2 million barrels a day. Even now, during the sanctions era, it manages to produce about 2.8 million barrels a day, well above Nigeria’s peak production.

Due to the sheer size of its market share and capacity in the past, Iran was considered as one of the 6 ‘energy super powers’, able to influence world markets and global politics to its advantage by manipulating supply.



Iran is seen as the Last frontier for investment – will take the shine as the leading destination for IOC cash.

Iran is the most important market still closed to major investors, according to Renaissance Capital.

Western oil multinationals have mostly been absent from the country since its 1979 Islamic Revolution.

With the lifting of sanctions, Iran will become one of the biggest global prospects for foreign investment, most especially its oil and gas sector. Iran, for its part, sorely needs the foreign money to catch up to the rest of the world. With its current technology, it is only able to extract between 20 – 25 percent of its oil-in-place (the total oil content in its reservoirs).




Implications

Iran already has a huge stockpile of oil, which had to be stored away following the seizure of its exports to trade partners.

According to Bank of America Merrill Lynch, It already has 30 million barrels of oil in tankers.

A lifting of the sanctions (following its compliance with agreement terms) could lead to an instant uptick of 500,000 barrels per day of oil (additional to the preceding amount) in the world supply, to be increased to 1 million barrels 2 in the coming months. About 35 million barrels could be finding its way into the market, which means prices will go south in the process.




Market impact

Iran is on a revenge mission. It is making it resoundingly clear that it aims to regain its lost customers.

According to Iranian oil minister Bijan Namdar Zanganeh, in a statement in May, Iran’s priorities are regaining customers in Asia and then Europe.

Iran’s Asian trade was mostly overtaken by Saudi Arabia and Kuwait.

In Europe, Iranian oil was displaced by Russia, Saudi Arabia and Iraq.

Unfortunately, those 2 same destinations are Nigeria’s most prominent and important markets.

According to NNPC FY 2014 figures, Europe accounted for 45.8 percent of Nigerian crude oil exports, while Asia accounted for 25 percent.

As a side effect to this, Saudi Arabia could be prompted to become more fervent in its strategy of boosting market share, to avoid Iran eroding its share of the market.

Also, the competition among OPEC members for Asian customers will become more intense.

As a marginal player, this outlook is “super-bearish” for Nigeria.

Nigerian sales and market share will shrink further.

Though, one thing that Nigeria has is bit more time.

There’s the high chance that the US congress will oppose the Iran deal, giving Nigeria some time to put house in order.

If Buhari is still talking about reforming the NNPC and plugging oil sector leakages by December, it might already be too late for the country.

By then, the attention should have moved away from oil, into buffering up other different industries, because “oil is dead”.
more on..... http://nairametrics.com/tick-tock-how-iran-deal-is-set-to-blow-nigerian-economy-apart/

Notin


Can blow an already blown economy

Developing an alternative source of revenue is the only solution to Nigeria Financial troubles. Reliance on a single source of revenue as the Major source of funding our National budget is a big no no no.

I sense the intention of this post to mean that Buhari will fail no matter how hard he tries. Countries does not develop on the sailing opportunity that oil offers alone. Buhari and his economic teams understands this and will do everything possible to see that this country becomes great again.

THE RATE AT WHICH THIS ZOOGERIA IS GOING DOWN EHHH...


WE GO SOON BEGIN DRINK THE OYEL...

Realisticman:
I sense the intention of this post to mean that Buhari will fail no matter how hard he tries. Countries does not develop on the sailing opportunity that oil offers alone. Buhari and his economic teams understands this and will do everything possible to see that this country becomes great again.

Please can you identify PMB economic team!

OP dont worry we have a Governor that has his four figure table Intact. Osho baba.

baralatie:
Please can you identify PMB economic team!

NEC for now.

it will still favour smart forex traders.

click here to be one of them

https://www.nairaland.com/2453421/real-time-free-forex-trading#35887673

baralatie:

Please can you identify PMB economic team!

The team is full of almajiri , led by prof. Abubakar Shekau

Nigeria need to start operating an interacting economy not just mere diversifying !!!

I believe and strongly so that Nigeria can survive on as low as $20/barrel of oil if the politicians could curb their excesses.

N200-N300M annual intake for HR and senate members is crazy.

400-700M security vote for state government is criminal.

Monumental corruption perpetrated by our political leaders without being brought to book is nauseating.

Docility and laziness of the Nigetian citizens is counterproductive.

Let's bring everything to order and you will see the oil price is useless. At least great number of nations survive without it.

slinkky:
Developing an alternative source of revenue is the only solution to Nigeria Financial troubles. Reliance on a single source of revenue as the Major source of funding our National budget is a big no no no.

The only alternative source of revenue is diversification of economy and increased taxation which no one will be happy about.

Realisticman:

NEC for now.

Can you now see that there is a problem!the only personality in this administration is the gov of the CBN(and that he has hands full supervising the banking sector).
I suggest PMB gets Okonjo as quickly as possible!

This spells doom for the illiterate magician, his brainwashed followers and their circus/zoo.


Give us [size=20pt] Biafra! [/size]

na only 9ja?

Realisticman:

NEC for now.

LMAO!

National Executive Council is now Nation Economic Planning.

baralatie:

Can you now see that there is a problem!the only personality in this administration is the gov of the CBN(and that he has hands full supervising the banking sector).
I suggest PMB gets Okonjo as quickly as possible!

Okonjo?!

Nigeria should continue tribal and religious war on who and how to control the oil money that is not in Taraba state. We are ending the country by ourselves.

That mean there will be nothing like Nigeria, if there is no oil there is no Nigeria, if we go back to agriculture mark my word Hausa and Yoruba will never nerver be comfortable sharing their revenue with others, you can consider the past and you will know the future

Realisticman:

Okonjo?!

She is the backbone on Nigeria's economic resilience.
Okay let us say PMB and the APC aew stuck not to have OKonjo.that is not a problem ,PMB needs an experienced economic and finance career personnel who understands world bank,IMF issues and can broker serious debt relief issues with the Nation in perspective.an individual who is not interest in being a governor or president or political aspirations.
A personality who is just interested in putting his her name as a international financial expert with ability to prefer solutions and delivering results in national economy.
Do you know any1 that fits?

baralatie:

She is the backbone on Nigeria's economic resilience.
Okay let us say PMB and the APC aew stuck not to have OKonjo.that is not a problem ,PMB needs an experienced economic and finance career personnel who understands world bank,IMF issues and can broker serious debt relief issues with the Nation in perspective.an individual who is not interest in being a governor or president or political aspirations.
A personality who is just interested in putting his her name as a international financial expert with ability to prefer solutions and delivering results in national economy.
Do you know any1 that fits?

These are all paper credentials! We need people who after going to school, come back home and study his/her local economy so as to be able to put the country on the right track. Someone once said that the buoyancy in economy is known on the faces of people you see on the street and not what we see on papers. Dora of blessed memory performed excellently as minister of information after previously heading NAFDAC even though she did not study mass comm. Brilliance is different from intelligence and leadership possitions.How is Nigeria's economy pre and post Okonjo?

My state(Edo) will not suffer,even if oil is sold for $20.We have fertile land for farming. we have cash crops like rubber, cocoa,oil palm etc.We have mineral resources like limestone etc.Its my brothers from bayelsa and other ss States that will suffer from oil price fall.I even want the oil to disappear so that asari and co should stop disturbing us.

mauriceju2:
That mean there will be nothing like Nigeria, if there is no oil there is no Nigeria, if we go back to agriculture mark my word Hausa and Yoruba will never nerver be comfortable sharing their revenue with others, you can consider the past and you will know the future

This is where it is interesting!what will shares is the royalties accruing from federal interests which would be if there was mining of gold etc but if the 8the house of assembly worked out a means where states can develop economically.it will go a long way.
For example,imagine if the same port facilities and trade facilities were in calabar and working what would you think about Nigerias exonomic position but the Biafra issue is a knife in the throat in that region.

Realisticman:

These are all paper credentials! We need people who after going to school, come back home and study his/her local economy so as to be able to put the country on the right track. Someone once said that the buoyancy in economy is known on the faces of people you see on the street and not what we see on papers. Dora of blessed memory performed excellently as minister of information after previously heading NAFDAC even though she did not study mass comm. Brilliance is different from intelligence and leadership possitions.How is Nigeria's economy pre and post Okonjo?

That paper credential is what has saved your economy.
Dora is a pharmacist and was celebrated world over as an accomplished pharmacist with resultsresults.it was that image that was bought to the office of the ministry.
Okonjo possess brilliance,intellighence and acute leadership as per anything economics and finance.and she has proving records but if the govt thinks otherwise ooo.no problem just get a person that can equally deliver.
There is opportunity for every1