Oil prices tumble to new 12-year lows

“Earlier today both WTI and Brent simultaneously crashed below $30 per barrel”. While experts warned that not all sanctions may be lifted immediately once the agreement comes into effect, any additional oil would add to a glut that has pushed prices into a deep slump since mid-2014.

Given current estimates by the current oversupply into the oil market in the order of 2mln-to-2.5mln barrels per day, it would trigger further uncertainty over crude prices that have come down from highs above US$110 a little over 18 months ago.

West Texas Intermediate (WTI) crude oil prices are expected to be $2/Bbl lower than Brent in 2016, and $3/Bbl lower than Brent in 2017, Kallanish Energy finds.

Tehran is expected to target India and its old partners in Europe with increased exports once sanctions are lifted.

Analysts expect Iran’s oil production to hit 3.2 million barrels per day by mid-year from 2.7 million barrels per day reported in December. Brent North Sea crude for delivery in February also gained 72 cents, finishing at $31.03 a barrel in London.

The rising conflict between Iran and Saudi Arabia over the execution of a Muslim cleric is another reason for bearishness in the oil market, said AZN analyst Daniel Hynes. After opening the day at $30.98 per barrel, Brent crude fell as low as $29.71 per barrel before 9:30 a.m. GMT, marking its lowest level since February 2004, according to official figures.

Crude futures rose yesterday for the first time in eight days, with USA oil pulling further away from the widely watched US$30 per barrel level breached the previous session, after United States crude stocks unexpectedly fell last week. It hit a 12-year low of $29.93 earlier this week.

Yawger also noted that crude-oil storage at the key Cushing hub was at an all-time record and nearing the terminal’s maximum capacity, while gasoline’s increase by 19 million barrels in the past two weeks was the biggest two-week build in history.

There’s a “trifecta going on here” in terms of factors that are driving down oil prices, said Tom Watters, a managing director at Standard & Poor’s specializing in the oil and gas sector.

The deal could bring daily exports of half a million barrels of oil within a week of the removal of the economic sanctions and a million barrels within six months, said Roknoddin Javadi, head of National Iranian Oil Company, said last month, as per media reports.