Miners Routed as Crude Oil Tumbles, Goldman Predicts More Losses

Crude prices hit levels unseen in a dozen years Friday on news of further declines in Chinese and American economic indicators and the probable lifting of Iranian sanctions; following Saturday’s formal announcement of their removal, prices may well fall again when trading resumes Monday, some analysts say. The additional sales will push crude prices lower as markets are already oversupplied, said Robin Millsof Dubai-based oil consultant Qamar Energy.

West Texas Intermediate, the U.S. benchmark, was down 1.5 per cent in Asia at $28.99.

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If oil stays at current levels authorities could be prsured into more spending cuts to reduce the red ink slowing economic growth further – and conceivably threatening a recession.

Iran is beginning efforts to boost production and exports by 500,000 barrels a day now that restrictions have been lifted, Amir Hossein Zamaninia, deputy oil minister for commerce and global affairs, said yesterday in an interview in Teheran. The price was $115 per barrel 18 months ago until Saudi Arabia greatly increased production to crush rivals in the USA and Russian Federation.

That means up to half a million barrels per day of Iranian crude could be added to already saturated markets, after a crippling oil embargo put in place over Tehran’s nuclear program was ended by U.S. and European governments. Others suggest that the sub-$29 trading range is underpriced and due for a rebound.

He said there was a possibility of an agreement being reached between the two nations on regulating their oil production before the conflict arose, but now such a pact is unlikely to be reached and the two large producers may end up undercutting each other by pushing crude oil into world markets.

A historic nuclear deal between world powers and Iran officially came into effect on Saturday, resulting in the lifting of sanctions on the country. But the IEA estimates that 400,000 to 500,000 barrels a day is more likely; some experts see 300,000 or so barrels coming in during the next six months. The volume of oil Iran could sell to its former buyers in Europe-where it was barred for three years following the imposition of worldwide sanctions-was unclear. Executives think it will be years before oil returns to $90 or $100 a barrel.

Iran’s daily production was estimated at 3.133 million barrels per day in 2016 and 3.333 barrels per day in 2017.

Ben van Beurden, the chief executive of Royal Dutch Shell, has defended the pounds 34bn takeover of rival BG Group, saying the deal makes sense “if over the next 20 to 30 years the oil price is above the $60s”.

Nigerian petroleum resources minister Emmanuel Ibe Kachikwu this week declared that he expects an extraordinary meeting of the OPEC oil cartel in “early March” to discuss nosediving crude prices.