“Iran’s early post-sanctions marketing appears to be effective with the National Iranian Oil Company indicating that exports have risen by 500,000 barrels per day since sanctions were lifted in mid-January, although we expect that some of this volume was sold out of storage”, investment bank Jefferies said.
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Spending on oil exploration and equipment is projected to drop by 17 per cent this year after a 24-per cent cut in 2015 “which would be the first time since 1986 that upstream investment has fallen for two consecutive years”, the IEA noted.
Oil prices recorded hefty gains in North America trade on Monday, with West Texas Intermediate futures climbing above the $33-level after the International Energy Agency said it expected USA shale production to fall this year and next.
Low oil prices have had devastating effects on communities that rely on the energy industry. Lower activity and investment, amid low crude prices, is the primary reason for the slowdown in shale oil production.
The IEA also admitted that predicting the oil market “is today a task of enormous complexity”, because oil market experts are still grappling with the implications of a dramatic drop in the oil price from over United States dollars 100 per barrel in July 2014 to around USD 30 today. He and Birol declined to blame low oil prices on OPEC’s decision to keep pumping away to preserve market share in the face of rising competition from the USA and elsewhere.
The Paris-based agency said American oil producers have so far been hit the hardest by the plunging oil prices.
Oil prices jumped more than 5 percent on Monday, buoyed by projections from the International Energy Agency (IEA), the world’s oil consumer body, that US shale oil production could fall by 600,000 barrels per day (bpd) this year and another 200,000 bpd in 2017.
Ole Hansen, head of commodity strategy at Saxo Bank, said that the market was concentrating on Iranian production and US production.
Pittsburgh-area gasoline prices decreased by 3 cents in the last week and averaged $1.88 a gallon this morning, as global leaders try to negotiate an oil production freeze to pare back oversupply that has pushed down petroleum prices.
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As for demand, markets will continue to pivot towards Asia, the report said. India is forecast to post the most growth, while demand from China is expected to cool as the country’s economy cools.
