Baku, Azerbaijan, Nov.5
By Leman Zeynalova – Trend:
While US sanctions on Iran may spark bargain hunting, after last week’s slump in prices, any relief rally should be short lived, the UK-based Capital Economics consulting company said in its report obtained by Trend.
“We have long cautioned that the drop in Iranian supply is likely to be offset by higher output elsewhere. Reports showing that both US and OPEC are increasing oil production, by more than many expected, led to fears about oversupply in the oil market and resulted in oil prices plummeting last week,” said the report.
Capital Economics believes that prices have further to fall in 2019 as US output should continue to increase once existing logistical bottlenecks are resolved.” Indeed, the relatively high oil prices earlier on this year have been encouraging more oil drilling, which hasn’t been completely translated into more output, yet.”
Falling oil prices may have hit coal prices, according to the report.
The US government's sanctions against Iran go into effect on Nov.5. The sanctions are designed to target Iranian oil exports and the country's financial sector.
The sanctions are aimed at dissuading third countries from doing business with Iran. While the US government has issued waivers to eight nations, including India, multiple European countries and Japan and South Korea have already stopped purchases of Iranian oil.
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