WSJ: Lifting of sanctions over Iranian oil exports sparks concerns that prices will move even lower

Hi all,

Thought this recent WSJ article was interesting and just wanted to pass it along-

Summary:

  • International sanctions against Tehran were lifted, raising the prospect of an estimated extra 500,000 barrels a day of Iranian crude flooding the oversupplied global market.
  • The lifting of Iranian sanctions should add to the selling momentum in oil prices,” said Norbert Ruecker, head of commodities research at Switzerland’s Julius Baer.The oil market is seemingly facing its final washout while transitioning into a new normal.
  • The exact timeline for the ramp-up of Iranian crude oil exports is still unknown.
  • Analysts at Commerzbank said that it is unlikely that the Iranian production volume will be increased significantly this year.
  • After all, Iraq and Libya took roughly twelve months to regain their original production levels following the wars in 2003 and 2011 respectively. Because Iran was unable to invest in its oil infrastructure for several years due to the sanctions and now has to make up for this, it is likely to take more rather than less time for oil production to normalize,” the bank said in a note to clients.
  • The Organization of the Petroleum Exporting Countries said that the market would start to rebalance later this year as weak prices take their toll on production outside the cartel.

Source

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Categories: Capital Markets

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