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Could Iranian Unrest Create Oil Market Risk?

By Ellen R. Wald, Ph.D.CommoditiesJan 03, 2018 04:30AM ET
www.investing.com/analysis/could-the-current-iranian-unrest-create-oil-market-risk-200277182
Could Iranian Unrest Create Oil Market Risk?
By Ellen R. Wald, Ph.D.   |  Jan 03, 2018 04:30AM ET
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By now we're likely all aware of the protests in Iran that have, in some cases, turned violent. Iranian protestors took to the streets beginning last week, originally to protest economic conditions and the regime’s continued foreign military and terrorist engagements. There are signs that the protests have broadened to include opposition to religious and social strictures.

So far, the protests have not impacted Iran’s oil production, and they remain unlikely to affect the oil market. Iran’s oil resources are not near any of the major population centers or sites where the protests are playing out.

If the protestors turned to sabotage, pipelines could become targets of attacks, much like what has happened in Nigeria, but pipelines are usually quickly and easily repaired. There is evidence suggesting that the Iranian separatist group Ansar al-Furqan attacked a pipeline carrying petroleum products in the Omidiyeh region on 31 December, but the group is not affiliated with the protests in Iranian cities.

The greatest threat to Iran’s oil production could come from strikes by oil workers. This was a tactic employed during the Iranian revolution in 1979. In fact, strikes in November 1978 caused Iran’s oil exports to drop from 4.5 million barrels per day to barely 1 million barrels per day at the time. However, there is no evidence yet of strikes from Iran’s oil workers.

If the Iranian government shuts down the protests it will only make Iran less attractive to foreign investors and Iran will not be able to improve its oil industry. Should that happen, Iranian oil production will remain stagnant and possibly decrease in the long-term.

On the other hand, if the protests do lead to a larger change in Iran’s government, it could be a welcome sign to foreign investors. A change in government could result in oil contracts that offer more favorable terms to foreign companies looking to invest in Iran’s oil industry. This could, in turn, lead to higher oil production in Iran.

Could Iranian Unrest Create Oil Market Risk?
 
Could Iranian Unrest Create Oil Market Risk?

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Do Deikins
DoRight Jan 03, 2018 6:51PM ET
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The will of the people is strong in Persia.  Freedom is a powerful call.  I am guessing that many mothers will grieve before it is over.
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Gary Hend
Icemangold Jan 03, 2018 2:34PM ET
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It's just kids running around. Youth unempl. 29%!
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Jan 03, 2018 11:04AM ET
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oil market becoming a soap opera in effort to sell public and market on higher prices. the public will pay because that's their mental state; predictable and dumb. the oil market enjoys seeing iran and maduro and middle east brushfire conflicts in news as it's news that leads the markets or so the price adjusters think. cushing may be to the rim with product; it doesn't matter. there will be No change in iran's governing. bunch of kids running through the streets in iran will simply find students hurt or worse. we all know this, and you should too.
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