EMEA News
Iran Predicts Flooded Oil Market Can Still Hit $50 per Barrel in 2016
Iran's oil income will not be harmed by its post-sanctions strategy of flooding an already oversaturated market with yet more crude, because it believes prices could reach $50 per barrel in the next year, Reuters reports.
Mehdi Asali, Iran's national representative to the Organization of the Petroleum Exporting Countries (OPEC), said his country's state budget for the fiscal year beginning March 20, 2016 is based on oil at $35 to $40 per barrel, and that "prices in the next year will fluctuate between $35 to $50, so Iran is not worried about a fall of its oil income."
It has been predicted that Iran, in seeking to reclaim its lost share of exports, will boost production by 500,000 bpd within a year of the sanctions being lifted.
Asali also stated that global demand for crude will surpass 94 million barrels per day (bpd) in 2016; however, he says prices will not exceed $60 per barrel before 2020.
The representative touched upon a familiar complaint by Iran that Saudi Arabia is flooding the market with crude in order to lower prices and thus undermine his country's economy: "OPEC members should find a solution to (the fall of oil prices) as this situation is not economically in their interest... Saudi Arabia has said it would only cut its oil production if Iran, Iraq and Russia do so."
As Iran anticipates its production windfall, American oil companies are discovering that the lifting of the sanctions under Washington's Joint Comprehensive Plan of Action could put them at a competitive disadvantage compared to European producers.
