The sanctions halved Iran’s oil exports to around 1.1 million bpd from a pre-2012 level of 2.5 million bpd.
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Meanwhile, more oil from Iran could boost global supplies further.
Analysts said the fundamental reason for low oil prices remained unchanged, with producers around the world pumping over 1 million barrels of crude every day beyond demand. The Brent contract for March delivery rose 69 cents to $29.24 a barrel, up 2.4 percent, by 1:04 pm EST (1804 GMT).
“Can it go any lower?” the International Energy Agency asked in its monthly oil market report.
Further worries that engulfed the market were regarding the added oil that will arrive soon in the market as global sanctions on Iran are lifted.
“The entire USA oil industry is uncompetitive at under $30 a barrel”, says finance expert Jordan Goodman, ‘America’s Money Answers Man.’ “I could see massive layoffs, cutting down on research and production, shutting down a lot of wells”.
It’s the steepest slide for oil prices since the financial crisis and is causing more troubles for the drillers and oil producing countries.
It comes as the agency said that mild temperatures in Japan, Europe and the USA had dampened demand in the fourth quarter.
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”.
Iran’s deputy oil minister, Roknoddin Javadi said on Monday that the country has ordered the production of an additional 500,000 barrels of oil per day following the lifting of sanctions on 16 January.
Iran could be the only source of supply growth in OPEC this year as a surge in Iraq fizzles out, the IEA said. Many oil companies, including Chevron and BP, have cut jobs and reduced spending to save money.
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The IMF report was finalised before crude prices fell some 22% in the first two weeks of the year as traders prepared for Iran to return to the worldwide market. We’ll discuss the supply and demand balance in the next part of this series to understand whether oil prices might rise.
