But in its most recent monthly report, it admitted that its “oil demand forecast for 2016 is subject to considerable uncertainties, depending on the pace of economic growth, development of oil prices, and weather conditions, as well as the impact of substitution and energy policy changes”.
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Directing Manager of Iran’s Central Oil Fields Company (ICOFC) Salbali Karimi said Iran enjoys one of the lowest levels of oil production costs in the world adding “the least expensive crude oil in terms of low cost of production is now being produced in the central areas of the country”.
“The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter”, said Richard Gorry, director of consultancy JBC Energy Asia.
Oil experts highlight that the flow of Iranian crude exports would exacerbate the oil glut. That’s the lowest level since October 2013.
Brent North Sea crude dived to 36.62 a barrel on Monday – a level last seen on December 26, 2008.
A fear of US production increases also looms – while the latest data has shown that USA production is falling, shale production can respond quickly to price increases, so that any rally could be met with a production increase. Brent crude fell to below US$36.70 a barrel for the first time since December 2008, Reuters reported.
OPEC is not due to meet until June 2 but Dr. Kachikwu who chaired the last OPEC meeting in December 4 as its President said an OPEC emergency meeting is likely in the months of March or April to figure out how the cartel can stem the collapse in oil prices.
Gasoline’s premium to heating oil for the January contracts widened as the heating oil contract slumped nearly 6 percent while gasoline fell 0.4 percent.
US oil prices have traded below the global benchmark for several years because USA crude supplies are high and producers have had to discount their crude to attract buyers.
“Nerves are fraying ahead of the Fed’s expected decision to lift US rates on Wednesday”.
According to the IEA report, 2015’s growth of 1.8 million bpd is led by China, the U.S.
As a effect, speculators are increasing their short positions and test when action would be taken by producers as oil prices are still seeking support. Also, analysts are expecting crude oil to remain lower for as long as oversupplies continue.
Iran’s push for big investment in its oil industry comes amid crude prices sliding to new record lows but officials are confident the low cost of production in the country will supersede any drawback.
USA oil futures are down 33% so far this year amid worries over ample domestic supplies.
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More than 190 countries struck a climate agreement over the weekend that would require nations to get less of their energy from fossil fuels like oil. But it said it didn’t believe the world would run out of storage capacity.
