We went through a period of super golden age for oil in terms of its price. I think it is over. This is for two reasons. First, massive amounts of supply is coming on. This is due to the sustained high price of oil for since 2006 motivating new exploration and facilitating new technology. I've lost the count of how many times there has been "peak oil" type predictions. They are all non-sense, because the advocates think that they are smarter than they actually are in that they think they have encompassed all the technology out there. Of course humans continue to innovate when pressed.
A very large reason why oil supplies were limited was and is due to geopolitics. Now, the prospects for two major producing countries, Iraq and Libya are positive. We have Iraq bringing on massive capacity, Saudi's already in with cushion capacity, and Persian Gulf states increasing capacity. We have Libya coming back. Brazil is becoming a major exporter, US is increasing production significantly with fracking, a technology that is bound to spread through out the world, and we have Canadian oil sands becoming more and more economical by the month.
And the demand side curve is flattening a lot more than people realize. Sustained high prices has set conservation in motion and China infrastructure will be coming to a screeching halt, something people do not realize yet.
As a result, it is highly unlikely that we would be seeing huge oil prices like before.
This all means that the party is over for Iran. The horrific political climate aside, there is absolutely no doubt that Iranians enjoyed a period of massive inflow of cash as a result of oil that resulted in high real estate prices for example in Tehran. That is over. Real estate prices will decline significantly in Iran beyond its current decline in terms of dollars. It will probably be 1/2-1/4 of its peak in dollar and even lower if the political situation gets worse.
A very large reason why oil supplies were limited was and is due to geopolitics. Now, the prospects for two major producing countries, Iraq and Libya are positive. We have Iraq bringing on massive capacity, Saudi's already in with cushion capacity, and Persian Gulf states increasing capacity. We have Libya coming back. Brazil is becoming a major exporter, US is increasing production significantly with fracking, a technology that is bound to spread through out the world, and we have Canadian oil sands becoming more and more economical by the month.
And the demand side curve is flattening a lot more than people realize. Sustained high prices has set conservation in motion and China infrastructure will be coming to a screeching halt, something people do not realize yet.
As a result, it is highly unlikely that we would be seeing huge oil prices like before.
This all means that the party is over for Iran. The horrific political climate aside, there is absolutely no doubt that Iranians enjoyed a period of massive inflow of cash as a result of oil that resulted in high real estate prices for example in Tehran. That is over. Real estate prices will decline significantly in Iran beyond its current decline in terms of dollars. It will probably be 1/2-1/4 of its peak in dollar and even lower if the political situation gets worse.
