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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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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.