Earlier in the session, oil had rallied after a breakdown in diplomatic ties between Saudi Arabia and Iran that some analysts speculated could result in supply restrictions on crude shipments out of the Middle East. “The Saudi-Iran standoff is certainly one to worry over given its ramifications for oil supply”, said Phil Flynn, analyst at the Price Futures Group brokerage in Chicago.
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The debt stems from Iranian oil deliveries in 2011 and 2012 that Shell was unable to pay because of the sanctions.
The mega glut in the oil market, OPEC’s loss of power as a cartel, and slowing demand led to the oil price collapse in 2015, and it could continue in 2016.
A quick flashback on the last day of the year shows how crude prices have hurt the broader markets nearly on a daily basis in 2015.
Brent for February settlement advanced 82 cents on Thursday, before the New Year holiday, to $37.28 a barrel on the London-based ICE Futures Europe exchange.
The EIA (U.S. Energy Information Administration) estimates that WTI crude oil prices could average $51 per barrel in 2016.
Several market analysts expect increased OPEC production, with Iranian exports to further deteriorate the commodity market condition.
Food and medicine were among the humanitarian goods supposedly not barred by sanctions but the United Kingdom government was reluctant to provide relief for Iran when Western powers were using sanctions to pressure Tehran. “We will raise our market quota steadily”, said Mohsen Qamsari, director general for worldwide affairs of the National Iranian Oil Company (NIOC).
“We will adjust our output to the global market’s demand”, he told Iran’s oil ministry news agency Shana on Saturday.
Iran is trying to capitalize on market opportunities in India and China, given an increased supply.
Iran provided Japan’s 5.2 percent of oil needs in November, ranking as Japan’s fifth top exporter of crude oil.
Bijan Zanganeh the Oil Minister of Iran said the country was not planning to exacerbate an oil market that was already bearish. Iran pumped 2.7 million barrels a day of oil in December, data compiled by Bloomberg show. Citigroup analyst Chris Main believes the oil market will regain momentum in the fourth quarter.
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“We will exercise great caution to prevent a further decline in global prices and will adopt certain methods and strategies to this end”, he added. He predicts crude oil to trade at an average of $40 per barrel in the first half of 2016, and at around $55-$60 per barrel in the fourth quarter.
