Newspaper article The Canadian Press

Premier Rachel Notley Downplays Oil Price Concerns after Iran Nuclear Deal

Newspaper article The Canadian Press

Premier Rachel Notley Downplays Oil Price Concerns after Iran Nuclear Deal

Article excerpt

Alberta premier downplays oil price concerns

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CALGARY - Alberta Premier Rachel Notley downplayed concerns Tuesday that a lifting of Iranian sanctions would harm the province's energy sector, though experts warned the Islamic republic's nuclear agreement could result in an increase in global oil supply, thereby pushing back any recovery.

The historic deal reached between Iran and six world powers has opened the possibility that Iranian oil could again be flowing freely on world markets after increased sanctions in 2012 cut a million barrels a day from the country's exports.

Notley said it's possible the lifting of sanctions for Iran could have "a bit of a suppressing effect on oil prices for a period of time."

"Like many Albertans, we talk about oil prices much like we talk about weather. And in both cases, we're used to change," she said in a teleconference call from Quebec City, where she met earlier with Premier Philippe Couillard.

"Alberta's a province that has been built on dynamic commodity prices and we've seen oil go up, we've seen oil go down and throughout it all, we've seen the resilience of our economic infrastructure."

But Laura Lau, senior portfolio manager at Brompton Funds, said the deal could cause oil companies to scale back investment plans.

"It's definitely not good," said Lau. "I think it's difficult for any North American (oil producer), whether it be Canadian or U.S., and I think they're going to have to rethink their capital spending programs and their production growth."

Lau said she doesn't expect a significant drop in oil prices because the Iran deal had already been priced into the market, and Iranian oil won't hit global markets until at least early next year.

But she said with Iran holding millions of barrels of oil ready to be shipped, and upwards of 500,000 barrels a day of production ready to start up, projections are already showing slower oil price increases.

Iran, which holds the world's fourth-largest proven oil reserves and second-largest proven gas reserves, could also ramp up production further with increased capital investments, Lau added. …

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