With global oil production growth continuing to outpace a rise in demand during 2015, oil prices look set to come under further pressure this year as the overhang in the market is set to be exacerbated by production coming in from Iran, according to the International Energy Agency.
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The IEA said Iran could add around 300,000 barrels a day of additional crude by the end of the first quarter, and that the return of Iranian crude to the global market will inevitably and largely offset the 600,000 barrels a day drop that is expected in supplies from producers outside OPEC.
USA crude oil prices have trended down for a year and a half, and have fallen nearly 40 percent in just the past three months.
Brent crude futures, the global benchmark, traded up $1.09 (U.S.), or 3.8 per cent, at $29.64 a barrel at 1028 GMT.
Many oil companies, including Chevron and BP, have cut jobs and reduced spending to save money.
Global oil demand growth slipped to a one-year low in the fourth quarter, from close to a five-year high in the third, amid mild winter temperatures and economic weakness in commodity producers.
On Monday, Iran, which is also an OPEC member issued an order to boost its oil production by 500,000 barrels a day said the deputy oil minister of the country.
Iran could be the only source of supply growth in OPEC this year as a surge in Iraq fizzles out, the IEA said. USA crude fell 26 cents to 29.16 per barrel after touching a high of 30.21.
“Can it go any lower?” the IEA asked. “Implementation Day for the nuclear agreement means a new oil day for Iran”, Daniel Yergin, vice chairman of research firm IHS and author of a Pulitzer Prize-winning book on the history of oil, said Sunday.
In the latest such example, French oil major Total on Tuesday said that it expected 2015 profits to be down by more than 20 percent from a year earlier because of falling oil prices.
Read:Could this surprising factor save oil from Iran-fueled slide?
Preliminary Reuters calculations based on government figures showed record oil consumption of 10.32 million barrels per day (bpd), up 2.5% from 2014, defying slowing growth in the world’s second-largest economy.
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The IEA also noted in its report that with once fast-growing economies like Brazil facing a deep recession and the U.S. dollar’s strength continuing to erode the purchasing power of many oil importers, prospects for increased global oil demand in 2016 aren’t particularly bright.
