The price of Brent crude oil falls below $28 a barrel for the first time since December 1, 2003.
The price of Brent crude oil falls below $28 a barrel for the first time since December 1, 2003.
The latest catalyst is the lifting of Iran sanctions, which is likely to exacerbate the oil glut that has resulted from the development of shale oil in the United States and a refusal to cut production at OPEC, alongside a slowing global economy and dimmer outlook for China, FT reports.
It is stressed: Iran claims it can swiftly boost production and exports by 500,000 barrels a day. The lift on sanctions comes just as relations between Iran and Saudi Arabia, OPEC’s largest producer and de facto leader, have soured.
According to chief analyst at CMC Markets in Sydney Ric Spooner: “There is ongoing negative pressure on oil prices from oversupply. Iran is not new, but we’ve arrived now at the point where sanctions have been removed and it’s going to be a key focus for the markets over coming weeks. The question is how much supply can come online in the short-term.”
Bloomberg reminds that Brent capped a third annual loss in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global surplus. Iran, which was OPEC’s second-biggest producer before sanctions were intensified in 2012, is trying to regain its lost market share and doesn’t intend to pressure prices with an export increase, officials from its petroleum ministry and national oil company said this month.
«Brent for March settlement fell as much as $1.27 to $27.67 a barrel on the London-based ICE Futures Europe exchange and was at $28.62 at 1:16 p.m. Hong Kong time. Front-month prices declined 13.7 percent last week for a third weekly drop. The European benchmark crude was at a discount of $1.52 to West Texas Intermediate for March», Bloomberg added.
