EMEA News
IEA: Oil Producers Likely to Get Even More Competitive on Price Once Iran Sanctions Lift
The International Energy Agency (IEA) says it expects oil producers "to grow still more competitive on pricing" due to expectation that Tehran will be selling more barrels per day (bpd) to Asian and European buyers once the sanctions against Iran are lifted, Reuters reports.
In noting that Iran has already lined up buyers for its crude once that happens, the IEA cited market sources in predicting that the country would be able to sell a minimum of 400,000 extra bpd, particularly into countries such as Italy, Greece, and Spain who were said to prefer to use Iranian crude as their feedstock.
Previous to the sanctions being imposed in 2012, Tehran was said to have been selling about 1 million bpd of high-sulfur sour crude to Europe.
Chronically low oil prices have, in recent days, been on the slide once again, and as of Monday have pushed IFO380 bunker prices in some key ports including Rotterdam and Houston to under $200 per metric tonne (pmt).
Meanwhile, the IEA says a market share battle between Russia and the Organization of the Petroleum Exporting Countries (OPEC) combined with Iraq overtaking Saudi Arabia as the second largest seller in Europe is worsening the European oil glut.
"Sour crude markets appear especially over supplied, with discounts versus sweet grades widening," it said.
"Europe is awash with competing sour crudes from the FSU and Middle East, and U.S. sour crudes remained depressed by refinery maintenance."
But as far as Alexander Novak, energy minister for Russia, is concerned, that glut will continue for the foreseeable future,
Novak told the press that he does not expect OPEC to cut oil output: "I consider it unlikely, taking into account the position of the biggest producers," he said.
He added that Russia would similarly not cut back, saying: "We are not going, let's put it like this, to lower oil production volumes."
Earlier this month, the IEA predicted that oil will most likely rebound to $80 per barrel by 2020, but a scenario in which it stays close to $50 per barrel in that time could not be ruled out.
