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Resuming Iran oil export to push prices down 14%

Oil&Gas Materials 13 August 2015 12:12 (UTC +04:00)
Iran’s return to the oil market and resuming pre-sanctions level export will push oil prices down 14 percent

Baku, Azerbaijan, Aug. 13

By Fatih Karimov - Trend:

Iran's return to the oil market and resuming pre-sanctions level export will push oil prices down 14 percent.

The World Bank estimates that the eventual addition of one million barrels a day (mb/d) from Iran, assuming no strategic response from other oil exporters, would lower oil prices by 14 percent or $10 per barrel in 2016.

The Islamic Republic and the group 5+1 (the US, UK, France, Russia, China, and Germany) reached a long-awaited comprehensive deal called the Joint Comprehensive Plan of Action (JCPOA) on July 14. It's expected that the deal will be commenced in 2015, limiting Iranian nuclear activity in return for lifting all international sanctions that were placed on Iran.

The report says that oil importers, including the European Union (EU) and United States (US), will gain while oil exporters, especially the Gulf countries, will lose.

The International Energy Agency also reported Aug.12 that Iran could raise its oil output by as much as 730,000 barrels per day (bpd) from current levels fairly quickly after sanctions are removed.

The West's energy watchdog estimated that Iranian oilfields, which pumped around 2.87 million bpd in July, could increase production to between 3.4 million and 3.6 million bpd within months of sanctions being lifted.

Iranian Oil Minister Bijan Zanganeh has said Iran expects to raise oil output by 500,000 bpd as soon as sanctions are lifted and by a million bpd within months.

The global oil glut will last through 2016 as the strongest demand growth in five years and faltering supply fail to clear the surplus, IEA says.

The global oversupply will average 1.4 million barrels a day in the second half of this year, straining available storage capacity, before easing to about 850,000 barrels a day in 2016, the IEA estimated. The production surplus in the second quarter was 3 million barrels a day, the highest in 17 years, it said.

Edited by CN

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