Addition oil from Iran may push crude prices down
Baku, Azerbaijan, Oct. 9
By Aygun Badalova - Trend:
Additional oil coming from Iran following possible removal of sanctions would push crude prices down, analysts from the US JP Morgan bank believe.
Iran could produce additional 400,000 barrels per day starting in 1Q2016, while Iranian government cited an additional 1 million barrels per day of production, according to the analysts' report, obtained by Trend.
"In addition to the 40 million barrels of crude held in floating storage that could be sold in the near future, an additional 500,000-700,000 barrels of crude per day would likely force markets to be heavily oversupplied for the balance of 2015 and much of 2016," analysts forecast in their one of the bearish scenarios for crude price.
"Crude prices would slump under the weight of additional crude, as Asian crude markets absorb higher Iranian exports," JP Morgan analysts said adding that Brent futures would likely need to head back towards $35 a barrel.
Iran currently produces more than 2.8 million barrels per day of crude oil. Iran is to resume oil production to pre-sanctions level in mid-2016 at 3.8 million barrels per day.
Iran is planning to increase its oil export from one million barrels a day to 1.5 million in the course of seven days once the sanctions are lifted. After that, the country will increase its export to two million barrels per day during the course of a six-month program.
On July 14, the P5+1 (the five permanent members of the United Nations Security Council and Germany) and Iran announced an agreement that could result in relief from United States and European Union nuclear-related sanctions (which include some oil-related sanctions) by the end of current year.