Baku, Azerbaijan, June 28
By Aygun Badalova - Trend:
Iran needs to think hard about how the country wants to grow their hydrocarbon market share, and Brexit give the Islamic Republic a huge opportunity, Sam Barden, the director of SBI Markets, an international commodity trading and advisory company believes.
“They [Iran] have a huge opportunity now as UK is free from Europe,” Barden said.
Britons held a referendum June 23 on whether the UK should to stay in the European Union, or leave it. The voting results indicate that the campaign to leave the EU, known as the Brexit, has won with 51.9 percent of the votes.
Barden believes it is a good thing and the right choice to exit Europe.
“Hopefully this will drive new markets and products away from "centres" as markets naturally become more decentralised,” he said.
Barden expects that as a result of Brexit UK will become much closer to Russia and Iran.
“Now they don't have Europe and America special interest (single market control) distorting UK's natural trading and economic interest. I think UK economy is a huge buy right now,” Barden said.
As for the result of Brexit for oil, Barden said that traders were long and wrong, and oil price will be pounded as they try and clear their positions.
“The fact remains: the oil market is oversupplied and there is a lack of storage and a glut of tankers,” Barden said.
Despite the broader sell-off in financial markets post the UK vote for Brexit, Brent crude prices remained close to $50 a barrel at the end of past week.
“This reflects the limited impact that the surprise outcome of the UK referendum entails for the oil market,” analysts of the US JP Morgan bank said in a report, obtained by Trend.
“UK demand accounts for just over 1.5 percent of global demand, and the downgrade to growth expectations in the wake of this result implies only minimal changes to our forecast balances in 2016 and 2017,” analysts said.
Further price weakness in the days ahead could materialize, as markets adjust to the new reality, if the large speculative position in Brent futures is aggressively unwound, analysts believe.
Such a dramatic position-squaring exercise would undoubtedly weigh on oil prices, they said.
“Nevertheless, the bigger picture outlook for oil has deteriorated only marginally. A recovery to $50 a barrel on a one- to three- month view seems reasonable,” JP Morgan’s analysts said.