Tankers began lining up Thursday to load millions of dollars of Iranian oil after confirmation that American sanctions were lifted last Saturday.
Iran has up to 22 oil tankers floating off its coast, 13 of which are fully loaded or almost fully loaded. Much of the oil will likely be going to India, which is Asia’s fastest-growing major oil market.
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“This is a big deal for the Iranian economy,” John Allen Gay, an editorial staffer with The National Interest who covers Iranian issues, told The Daily Caller News Foundation. “However, they have a lot of economic problems to address which might be bigger than the country’s oil wealth. This is suppressed growth or recovery, not a new step forward. They need a lot of investment in the oil industry and in a whole lot of other economic sectors, which have been suffering for years, to really get their economy going.”
Finding enough cash to invest in Iran’s oil industry could be a huge problem thanks to incredibly low oil prices. Lifting sanctions will only give Iran between $100 to $150 billion.
“The country’s industry must form around the oil industry and the Ministry of Petroleum has plans available in oil, gas, and petrochemical fields worth 200 billion dollars,” Iranian Vice President Eshaq Jahangiri told reporters Monday. Iran plans to increase output by up to 500,000 barrels of oil per day.
Due to sanctions and lack of cash, Iran hasn’t seriously invested in its oil sector for years. Simply restoring previous production levels is estimated to require a minimum $150 billion of new investment. The number could be as high as $500 billion over the next five years, according to reports by Iran’s state-run news agency.
“The foreign asset position of the central bank is around $100bn, but we are bringing back only $29bn to the country,” Akbar Komijani, the deputy-governor of Iran’s central bank, told an EU trade conference.
Posted by The Daily Caller.