Iranian oil could potentially drop oil prices by $5 to $15 in 2016
The Energy Information Administration (EIA) released its Short-Term Energy Outlook (STEO) for April 2015 projecting that oil prices could drop by $15 if sanctions on Iran are lifted and the country is allowed to export oil. “The baseline forecast for world crude oil prices in 2016 could be reduced $5 to $15/barrel from the level presented in the STEO,” if Iranian oil comes back on the market, says the note.
Iran is believed to have at least 30 MMBO of crude in storage, says the note, and could potentially ramp up production by an additional 700 MBOPD by the end of 2016. This production would not likely come back to the market until next year as lifting the ban would likely be predicated on Iran following through with the terms of a nuclear agreement.
Iran calls on Saudi Arabia to cut production
Iran has joined other OPEC member in calling for the organization’s largest producer to cut its production. Iranian Oil Minister Bijan Zanganeh was quoted as saying that OPEC as a whole should cut its daily production target by at least 5%, or approximately 1.5 MMBOPD, reports CNBC.
OPEC’s decision, led by Saudi Arabia, to maintain its production target in November of last year sent prices plummeting. Many OPEC countries have been hurt by low oil prices, and many have called on the organization to cut production in order to prop up the price of oil.
Calls from non-OPEC countries echo those of the member nations hurting from low oil prices, but OPEC maintains that it will not cut prices by itself. “In the past, OPEC has often shouldered the burden of ensuring oil market stability alone,” the organization said in its monthly bulletin. “In the current situation, which should be of great concern to ALL, is it not time for this burden to be shared?”
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