Meanwhile, Prime Minister Narendra Modi met global oil and gas experts here to discuss ways of boosting investments in the exploration and skill development at a time of low oil prices. Inventories were at 482.3 million barrels, “near levels not seen for this time of year in at least the last 80 years”, the agency said. At below $36 a barrel on Tuesday, the price is down more than 2 percent early in 2016.
Advertisement
For over a year, global oil prices have been encumbered by unrelenting oversupply as major oil producers have refused to curtail output for the sake of market share.
Iranian crude oil exports have fallen to around 1 million barrels per day (bpd), down from a peak of nearly 3 million bpd in 2011, before western sanctions against Tehran started.
The story plays out in like manner for Brent crude and United States oil, as they both fell below $33 – lowest in over 7 years.
Analysts said that as long as the conflict did not affect oil production in the region it would not have a effect for oil prices.
Reports on Monday indicated that manufacturing is continuing to struggle, with factory activity falling in December for the second straight month in the US and the 10th straight month in China.
The slowing Chinese economy and depreciation of the yuan raised concerns that China would retreat from the crude market due to less energy demand.
Brent crude dropped below US$35(S$50) a barrel to an 11-year low before weekly USA government data forecast to show fuel supplies rose in the world’s biggest consuming nation.
That issue is not limited to the U.S. Oil-storage terminals in South Africa are full, and China-bound tankers have been seen waiting offshore until there is room to offload their shipments of crude, he said. Stewart Glickman, an analyst with S&P Capital IQ, said geopolitical risk has lost some of its ability to influence oil prices.
Qamsari also said that the state-backed oil company was looking at buying stakes in existing and new refineries overseas to ensure a steady market for its crude.
The explanation lies partly in robust production in the U.S., Glickman said. Saudi officials are reluctant to cut production in a bid to raise prices because they’ll just concede sales to U.S. producers who will fill the void in supply.
The declines came a day after West Texas Intermediate fell 5.6% and Brent fell 6%. That surprised oil traders and sent crude prices sliding.
Advertisement
“At this point, the increased tensions between the regional powers of Saudi Arabia and Iran has limited direct impact on the oil market supply and demand fundamentals, unless the developing events cause the Iran nuclear deal to break up, although this is not expected”.
