The head of Iran’s central bank says it has successfully transferred some of its formerly frozen assets in order to ensure that financial sanctions have been fully lifted in accordance with a historic nuclear deal.
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Oil futures remained under pressure in early trading on Tuesday (Jan 19), following a slide that has seen prices fall by more than a quarter since the beginning of the year, as the full return of Iran to oil markets adds to an already huge supply overhang.
Exceptionally mild winter temperatures in Europe, the USA and Japan, as well as weak economic sentiment in China, Brazil, Russia and other commodity-dependents economies, drove demand down from 2.1 million barrels per day (MMBPD) in Q3 2015, to 1 MMBPD in Q4.
United States shale oil coming on stream and now Iran’s re-entry into the market mean supply is high and likely to stay high. JBC Energy GmbH expects Iran to boost output more slowly, by 255,000 barrels a day in 2016, it said in an e-mailed note.
Buyers of Iranian crude are free to import as much of it as they want after the International Atomic Energy Agency determined that the country had curbed its ability to develop a nuclear weapon.
Ample storage space for crude around the world, including 230-million barrels of new storage to be completed this year, would help to prevent further sharp price falls but would weigh against significant price rises, analysts and industry watchers said.
The expiry of the February contract on Wednesday was “probably” adding further downward pressure on US West Texas Intermediate (WTI) oil as traders closed positions, CMC Markets chief market strategist Michael McCarthy said.
“As drilling subsides due to high costs and a potentially sustained low oil price, production can be expected to follow, possibly late in 2016”.
Map of Iran’s oil infrastructure.
Falling crude prices have led to lower prices for gasoline, diesel, jet fuel and heating oil. The astonishing fall of oil has created jitters globally as economic growth for a major consumer, China, ebbs. It has since dropped to fifth place in the 13-member organization, reported Bloomberg, producing 2.7 million barrels per day in December.
According to the Energy Information Administration’s Monthly Energy Review database, world field production of crude oil in September was up 1.5 million barrels a day over the previous year.
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Iran, which was the second-biggest producer in the Organisation of Petroleum Exporting Countries (Opec) before sanctions were intensified in 2012, was targeting an immediate increase in shipments of 500,000 barrels a day, Amir Hossein Zamaninia, deputy oil minister for commerce and global affairs, said on Sunday.
