Iran sanctions: Middle East stock markets crash as Tehran enters oil war

[Luiz 4,253]

Prospect of the Islamic Republic pumping an additional 500,000 barrels a day sends stock markets in Dubai and Saudi Arabia into tailspin

Stock markets across the Middle East collapsed as the lifting of economic sanctions against Iran threatened to unleash a fresh wave of oil onto global markets that are already drowning in excess supply.

All seven stock markets in Gulf states tumbled as panic gripped traders. Dubai's DFM General Index slumped 4.8pc to 2,682.56, while Saudi Arabia's Tadawul All Share Index collapsed by 7pc to 5,409.35, its lowest level in almost five years.

The Iranian stock index gained 1pc, making it one of the best performing markets in the world with gains of 6pc since the start of the year.

The dramatic moves came following the historic report from the UN nuclear watchdog, which showed that Iran has met its obligations under the nuclear deal, clearing the way for the lifting of sanctions.

The Vienna-based International Atomic Energy Agency issued the landmark document late on Saturday evening, sparking mayhem as markets opened in the Middle East.

Qatar’s index fell 6.7pc, while Abu Dhabi’s stocks tumbled 4.5pc to the lowest level since November 2013. Oman’s shares were down 3.2pc, the most since December 2014, and Bahraini equities edged 0.5pc down.

The stock markets in Dubai and Saudi Arabia have been plunged into a painful bear market, losing 42pc and 38pc respectively, ever since Saudi Arabia decided to ramp up oil production in November 2014.

Oil prices fell below $30 for the third time last week as traders prepared for the prospect of Iranian oil flooding global markets.

The Islamic Republic has vowed to return its oil production to pre-sanction levels, with estimates suggesting Tehran will add a further 500,000 barrels a day (b/pd) to the world's bloated stockpiles within weeks.

Fears that the Islamic Republic could quickly ramp up production sent Brent crude falling by 3.3pc to $29.43 - matching lows last seen in 2004.

West Texas Intermediate also slipped back to $29.60, a decline of 4.5pc.

Oil has shed more than 75pc since last summer - a post war record - as over-supply and fears over global economic growth has depressed traders. * Oil price crash means petrol could become cheaper than bottled water

https://uk.finance.yahoo.com/news/iran-sanctions-middle-east-stock-102835505.html

 

[Economy 52,839]

I was about to post this and you beat me to it  

 

btw 500,000 barrels a day was just the innital addition. They will a total of 1 million by years end

 

http://www.theguardian.com/world/2016/jan/16/iran-prepares-for-lifting-of-sanctions-and-the-end-of-decade-long-isolation

[TiphEret 1,320]

Can this affect Canada?

[Economy 52,839]

22 minutes ago, TiphEret said:

Can this affect Canada?

Yeah. Keep oil prices down and thus our currency and value of our #1 export (oil)

 

But I live in Ontario. Were one of the Provinces that do better with weaker currency and cheaper fuel since were manufacturing based

 

British Columbia and Quebec also benefit a lot from current conditions

 

Basically the 3 most populated Provinces benefit

 

But because the positive effect of lower oil and comodities in general is smaller than the damage it does to Provinces that produce it, Canada asa whole still suffers

 

For instance cheaper resources might increase economic growth by 0.2% to 0.4% annually in Ontario, Quebec British columbia. But in Alberta it may sacrafice 2% of economic growth annually

[TiphEret 1,320]

4 minutes ago, Economy said:

Yeah. Keep oil prices down and thus our currency and value of our #1 export (oil)

 

But I live in Ontario. Were one of the Provinces that do better with weaker currency and cheaper fuel since were manufacturing based

 

British Columbia and Quebec also benefit a lot from current conditions

 

Basically the 3 most populated Provinces benefit

 

But because the positive effect of lower oil and comodities in general is smaller than the damage it does to Provinces that produce it, Canada asa whole still suffers

 

For instance cheaper resources might increase economic growth by 0.2% to 0.4% annually in Ontario, Quebec British columbia. But in Alberta it may sacrafice 2% of economic growth annually

Ok interesting. I noticed this week that the $CAD is lower and bec I usually use my French account it's "good news" for me but on the long run don't think it is for Canadian

[Economy 52,839]

10 minutes ago, TiphEret said:

Ok interesting. I noticed this week that the $CAD is lower and bec I usually use my French account it's "good news" for me but on the long run don't think it is for Canadian

Weaker currency has its advantages. More tourists come to your country, its also easier to compete with other Nations to export when currency is down

 

the best exchange rate tho depends on a Countrie varying circumstances

[TiphEret 1,320]

32 minutes ago, Economy said:

Weaker currency has its advantages. More tourists come to your country, its also easier to compete with other Nations to export when currency is down

 

the best exchange rate tho depends on a Countrie varying circumstances

Ok I assume it could mostly be negative but you are right! I am glad also cause my rent seems lower hehehe! But if you leave Canada you will feel the difference with stronger currency right?

[Economy 52,839]

2 hours ago, TiphEret said:

Ok I assume it could mostly be negative but you are right! I am glad also cause my rent seems lower hehehe! But if you leave Canada you will feel the difference with stronger currency right?

Yeah. Makes traveling for us outside of Canada more expensive and I wanted to go NY this year

[TiphEret 1,320]

26 minutes ago, Economy said:

Yeah. Makes traveling for us outside of Canada more expensive and I wanted to go NY this year

I feel you! But do you think the currency will go up soon? Come wit me I am going to NY in february, you can travel for cheap using carpool and couchsurfing

[Economy 52,839]

1 hour ago, TiphEret said:

I feel you! But do you think the currency will go up soon? Come wit me I am going to NY in february, you can travel for cheap using carpool and couchsurfing

Lol i already got a group going but thanks

 

and it should rise again when comodity prices rebound. Our currency is very tied to the price of natural resources especially oil

[Woolfsmck 2,763]

14 hours ago, Economy said:

Lol i already got a group going but thanks

 

and it should rise again when comodity prices rebound. Our currency is very tied to the price of natural resources especially oil

There are a couple of a factors that will continue to weigh the price of oil down for a few more years imo.

One...Iran's oil production projections are conservative based on 'current' technology they are using.  Much of their oil field extraction equipment is outdated to pre-revolution American techology. 

Two... They have numerous 'undeveloped' well sites that have European developers waiting to invest in which will significantly increase their oil output once the wells are built with updated equipment.

Three...most developing economies are going with 'green' energy' plans which will limit the amount of future demand as their industry grows.

 

Doing the math, limited demand growth and production increases along with the U.S. now being allowed to sell oil abroad puts a bleak picture on the potential for oil price growth. 

On the up side, any company that relies on transportation or petroleum products should see price stability for their operating costs...which imo means that economic stability across multiple segments (ag, manufacturing, service,) should materialize and balance the diversified economies that most western and eu economies have.

[Economy 52,839]

4 hours ago, Woolfsmck said:

There are a couple of a factors that will continue to weigh the price of oil down for a few more years imo.

One...Iran's oil production projections are conservative based on 'current' technology they are using.  Much of their oil field extraction equipment is outdated to pre-revolution American techology. 

Two... They have numerous 'undeveloped' well sites that have European developers waiting to invest in which will significantly increase their oil output once the wells are built with updated equipment.

Three...most developing economies are going with 'green' energy' plans which will limit the amount of future demand as their industry grows.

 

Doing the math, limited demand growth and production increases along with the U.S. now being allowed to sell oil abroad puts a bleak picture on the potential for oil price growth. 

On the up side, any company that relies on transportation or petroleum products should see price stability for their operating costs...which imo means that economic stability across multiple segments (ag, manufacturing, service,) should materialize and balance the diversified economies that most western and eu economies have.

Well then, good news for us I guess

 

Low oil prices and other natural resources are helping equalize Canadas economy gap by helping manufacturing based areas (like my area) instead of having all the economic growth in Alberta and Saskatchwean

 

This also bringing down bond yields and investors flee our energy stock market but still feel Canadian Bonds are safe due to low debt

 

Canada interest rates on 2 year bonds is at 0.3%. On 5 year bonds 0.7% and on 10 year bonds about 1%...

 

We beat Japan for cheapest Government credit without QE