Iran is about to start selling oil that may cost just $1 a barrel


A year ago, when Anatole Kaletsky suggested that the price of oil might fall to $20 a barrel, most people laughed. The global economy was growing! Demand was picking up! Oil had been at $100 only recently!

Citi, at the time, expected oil to go back up to $63 a barrel in 2015, after the price plummeted below $50.

Today, oil sits at $37 a barrel. Goldman Sachs recently agreed it could tumble as low as $20 a barrel, a level that would decimate the already heavily damaged economies of Saudi Arabia and Russia.

And no one is laughing.

The world is awash with oil. Everyone expects it to stay that way for decades. OPEC predicts the price won't go back above $100 until 2040.

This week, Kaletsky has a new suggestion for oil-watchers to consider: Iran may be able to produce oil for just $1 a barrel, he wrote in a column for Project Syndicate (emphasis ours):

ExxonMobil, Shell, and BP can no longer hope to compete with Saudi, Iranian, or Russian companies, which now have exclusive access to reserves that can be extracted with nothing more sophisticated than nineteenth-century "nodding donkeys." Iran, for example, claims to produce oil for only $1 a barrel. Its readily accessible reserves — second only in the Middle East to Saudi Arabia's — will be rapidly developed once international economic sanctions are lifted.