According to Reuters, International Brent crude fell to US$27.67 a barrel early yesterday, its lowest since 2003, before recovering to US$28.25 by 0103GMT, still down more than two per cent from their settlement on Friday.
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Front-month Brent crude futures, though up a notch just after opening Tuesday’s trade, remained below $29 per barrel at $28.69 per barrel.
At around 0250 GMT, the contract was trading 39 cents, or 1.35 percent, lower at 28.55.
The research team further highlighted that the lifting of Iran’s economic sanctions would restore the nation’s access to global markets and circa US$100 billion of its money frozen in foreign accounts. As worries about Iran’s return to an already glutted oil market drove down oil prices, analysts believe that the fresh sanctions announced by United States over its ballistic missile programme might change the tune of events in the worldwide oil market.
Iran is ready to increase its crude exports by 500,000 barrels a day, the deputy oil minister said on Sunday, hours after global sanctions on Tehran were lifted, removing an obstacle to exports. “Gulf states budgets were dependent on oil prices of $70 [a barrel], that’s the level they need to balance their budgets”, said analyst Nour al Zoubi with World Financial Services in Dubai.
The Kingdom is the world’s largest exporter of oil.
“The revision has been due to stronger declines expected in the U.S. and Canada caused by the lower price environment”, the cartel said in its OMR.
They estimate that Iran already has some 46 million barrels of petroleum pumped and stored offshore and another 30-40 million barrels reportedly in storage on land.
Iran is aiming to increase output by close to 1.5 million barrels by the end of 2016, taking daily production to 4.2 million, Iran’s oil minister Bijan Zanganeh told CNN in an exclusive interview.
The move came on the same day that oil prices hit their lowest level since 2003 as the markets prepare for the extra Iranian oil to enter the oil economy.
“I think Iran’s main priority is going to be re-establishing its customer base and re-establishing its market share”.
DBS said expectations are that exports from Iran will grow by 300,000 barrels per day in the short term and rise to 500,000 barrels per day by mid-year.
It said Europe is expected to be the initial target for Iranian oil exports but noted that Iran “will have to offer incentives and ensure sufficient transparency in its domestic banking sector to lure back European buyers”.
Yet most analysts don’t expect a huge reaction once markets open again after the weekend.
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Stock markets are off to another bumpy start to the week. Futures shed as much as 4.4% in London registering lows only seen in 2003.
