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The Oil Secret No Investor Wants to Accept

Written by Keith Kohl
Posted January 15, 2020

Imagine how angry you’d be if you lost out on $200 billion.

I’m not saying you missed the lottery, mind you. Instead, you’re holding the winning numbers in your hand, then in one quick motion rip the ticket it up and toss it in the trash.

You’d be fuming from that kind of lunacy.

Don’t worry; you’re not alone.

Well, that’s exactly what Iran did.

Except, its geological lottery ticket just happens to be oil.

If we take OPEC’s word for it, Iran holds more than 155 billion barrels of proven oil reserves. Granted, that doesn’t include the recent discovery over-hyped by Iranian President Hassan Rouhani last November.

Even without it, we’re still talking about a lot of oil; Iran holds the third-largest amount of proven reserves, with only Saudi Arabia and Venezuela boasting more.

Oil, Oil, Everywhere… and Not a Drop to Sell

Three years ago, the country was extracting less than 4 million barrels of crude on a daily basis.

Its output had been relatively steady since the 1990s.

Then came sanctions, and with it a considerable cut in oil exports.

But how bad has the situation gotten for Iran?

Over the past two years, Iranian oil exports have fallen by more than 90%.

To give a little perspective to this, U.S. sanctions on the country’s oil industry have cost it roughly $200 billion in revenue.

Iran’s biggest customers have jumped ship.

India, Turkey, South Korea… they’ve all jumped ship.

China has been trying to hold out for as long as it can.

Unfortunately, President Trump is sticking to a zero-tolerance policy. Last September, the U.S. placed sanctions on China’s COSCO Shipping Tanker.

Did it completely stop the Chinese from buying Iranian crude? Not exactly.

The last thing the Iranian government wants is the U.S. and China to get along, and considering the two have been waging a bitter trade war for the last few years, you’d think Iran could rest easy.

Well, the first phase of the trade deal was signed this morning.

The Oil Secret No Investor Wants to Accept

Despite its best attempts to elevate oil prices, Iran has been failing miserably.

In the past, all it needed to do was kidnap a few sailors, make a few threats that involve closing the Strait of Hormuz, then watch as oil prices spike.

It's starting to realize that the dial doesn’t move so dramatically anymore.

Think about it: In the last few months, we’ve seen direct attacks on Saudi oil facilities (which knocked out half of Saudi capacity literally overnight!), and the most recent series of events that have pushed U.S.-Iranian tensions to new heights.

Throughout it all, the price for a barrel of WTI crude barely surpassed $65 per barrel for the briefest of moments.

Why?

Let’s face it; the Permian Basin is the worst-kept secret in the U.S. oil industry.

But there’s one major issue that most investors refuse to accept.

Production growth is slowing in the Permian Basin.

The massive oil boom that took place over the last decade means that operators are staring at a much larger base decline rate in the area. In order to offset that, companies will need a drill at a frenzied pace just to keep production flat.

One of the few things that have helped insulate the world from these oil price shocks has been the fact that the Permian Basin is extracting more crude oil now than the mighty Ghawar oil field in Saudi Arabia.

That won’t last forever.

The trick for us has always been to stay ahead of the herd.

That’s precisely what we’re doing right now.

My readers and I have been closely following a small team of seasoned Texas geologists that have struck it huge in one Texas county.

At stake is more than 3.7 billion barrels of black gold.

Trust me, you need to see these details for yourself.

I break it all down for investors right here.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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