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Atomic Insights

Atomic energy technology, politics, and perceptions from a nuclear energy insider who served as a US nuclear submarine engineer officer

Tight markets empower suppliers

September 18, 2005 By Rod Adams

As diplomats consider possible actions to try to alter Iran’s stated desire to build a complete nuclear fuel cycle for peaceful power production, they would be well advised to take a hard look at the current oil markets.

Iran exports approximately 2.5 million barrels of oil per day from its 4 million barrel per day production. For the past couple of years, the prices for those exports have exceeded OPEC’s 2002 target price by $10-30 per barrel. Here is one of many historical articles from that time period that helps us remember what it was like way back in December 2001 when the price of a barrel of oil was less than $20.00.

http://www.cbsnews.com/stories/2001/11/14/world/main318030.shtml

Though Iran does not publish much information about its finances, simple math shows that they could have accumulated a substantial cash balance, especially when that amount is compared to the amount that they would have expected to accumulate if oil prices had remained in the already profitable range of $22-28 per barrel that was the established goal as recently as 4 years ago.

Iran might very well have the financial strength to go without oil income for a number of months. Based on the reaction of the oil markets to the disruption caused by Hurricane Katrina, which removed a little over 1 million barrels of oil per day from the market for a few weeks, it is not difficult to predict that the removal of 2.5 million barrels of oil per day would cause substantial pain for the world’s energy consumers.

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About Rod Adams

Rod Adams is an atomic energy expert with small nuclear plant operating and design experience, now serving as a Managing Partner at Nucleation Capital, an emerging climate-focused fund. Rod, a former submarine Engineer Officer and founder of Adams Atomic Engines, Inc., one of the earliest advanced nuclear ventures, has engaged in technical, strategic, political, historic and financial discussion and analysis of the nuclear industry, its technology and policies for several decades. He is the founder of Atomic Insights and host and producer of The Atomic Show Podcast.

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