New Iran Supplies Will Add to Oil Price Pressures

According to IEA, International Energy Agency, there could be yet another fall in the price of Oil as there has been an excessive supply of the same in placed where there is much lesser demand. “There is no reason to believe why and how prices will recover by the end of 2017”, Abhishek Deshpande, oil analyst at Natixis, told Reuters Global Oil Forum.

Additionally, the IEA says it increasingly looks as if oil-market demand will decline in 2016, leaving markets even more stretched.

Now that sanctions in Iran are lifted and the country can start selling its oil internationally again, the market stands to be greatly exacerbated by the new supplies, the International Energy Agency warned Monday.

Venezuela has requested the Organization of the Petroleum Exporting Countries (OPEC) hold an emergency meeting to discuss steps to increase oil prices.

Another benchmark, U. S. crude CLc1 also dropped 48 cents to $28.94 per barrel which is close to its lowest noted in 2003 at $28.36. This accounts for some 27 billion barrels of oil and equivalent natural-gas volumes, the report said, and brings total industry-wide deferred spending for 2015 to $US380 billion.

Iran immediately announced a major boost in oil production, with the National Iranian Oil Company saying it had ordered output to increase by 500,000 barrels per day.

OPEC crude output eased by 90,000 barrels per day (kb/d) in December to a still-lofty 32.28 million barrels per day, including newly rejoined Indonesia.

IEA estimated that global oil supply expanded by 2.6 million b/d past year, following hefty gains of 2.4 million b/d in 2014.

“We believe prices are likely to come under more pressure after the release of EIA inventory data”, ANZ bank said on Thursday. Saudi Arabia, Iraq and Russian Federation have benefited from the three-year sanctions against Iran, which kept it out of the oil markets.

He said weaker demand in the Middle East, which has been hit by lower oil prices, could add fuel to the sell-off and there was little to stop crude falling to $20 per barrel.

With the world economy slowing, the IEA added that it had cut its forecast for 2016 OPEC crude oil demand by 300,000 bpd to 31.7 million bpd.