Renewed Negotiations Between U.S.-Iran Leading To Cheap Oil On The Market?

  @David_Kashi on October 23 2013 11:26 AM
Rouhani
Iranian President Hassan Rouhani addresses the 68th United Nations General Assembly at UN headquarters in New York on Sept. 24, 2013. Reuters

A senior official says Iran is offering to sell discounted crude into Western markets if crippling sanctions against the country are eased.

Mohsen Ghamsari, head of trading at the National Iranian Oil Company, said Tuesday that several customers were interested in discussing the potential for future exports as U.S.-Iranian relations warm somewhat, Reuters reported.

“Naturally, a resupply of Iran's crude oil on the world markets will result in oil price cuts,” Ghamsari said.

Currently sanctions allow only China, India, Japan, South Korea, and Turkey to purchase Iranian oil. The U.S. and European Union have imposed sanctions on Iran over its nuclear program and have stopped buying Iranian oil, cutting Iran’s exports from 2.3 million barrels a day to 1 million.

A recent phone call between President Barack Obama and his Iranian counterpart Hassan Rouhani indicated to experts that sanctions may be set to ease.

Iran's government is also encouraging alternative energy development to offset its stagnant oil production and insufficient refining capabilities. In 2012 it designated $620 million for renewable energy projects and technologies and now plans to build three new wind farms.

The project would add another 350 megawatts to its current 120-megawatt wind farm capacity. One megawatt of energy can sustain about 1,000 homes for one hour.

Under Iran’s five-year plan, renewable energy production should increase to 1.5 percent of its energy mix by 2016. Iran’s renewable energy program, which includes wind power, is one of the Middle East's largest, having already installed 9,385 megawatts, according to a Wall Street Journal report in 2012 that sited a green-energy information database.

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