Referring to the start of talks between the National Iranian Oil Company and traditional customers of Iran’s oil, he asserted that, “part of the increase in production and exports of crude oil will be sent to these customers”. The bearish sentiment sent European and US stock markets sharply lower on Friday, with Frankfurt’s Dax down more than 3 percent and the U.S. S&P 500 index down 1.15 percent at 1338 GMT.
On the supply side, Opec expects supply from the United States to slow down considerably next year, largely due to the impact that the lower oil prices have had on the shale industry. “There’s nearly no way that OPEC can get the band back together”, said Greg Priddy, the director for global energy and natural resources at the Eurasia Group.
USA investment giant, Goldman Sachs is predicting that oil prices will fall further in the coming months.
Refineries in northwest Europe now earn 24 per cent more than a year ago and the most for this time of year since 2012, BP data show. Many in the Gulf also have diversified their economies.
BP and global peers including Royal Dutch Shell Plc have responded by cutting spending and selling assets. It blamed falling energy prices. Meanwhile, Iraq’s autonomous Kurdish region now sells oil independently from the central government.
USA crude futures fell sharply on Friday erasing massive gains from earlier in the week, even as oil rig totals nationwide extended a streak of minor declines.
While Chinese stockpiling will “taper off” in 2016, it’s helping the oil market to digest excess production gradually, according to Goldman Sachs’s Currie.
If Iran adds more barrels to the already oversupplied market, it could fuel the bearish momentum for the market. While USA crude production slid for a sixth week, the nation’s stockpiles remain about 100 million barrels above the five-year seasonal average. Oil production fell dramatically in the 2011 civil war that saw longtime dictator Moammar Gadhafi killed. Some of the analysts view the news as a positive one for the crude oil prices as a rate hike could have triggered volatility in the oil prices. That puts additional pressure on the 12 members of OPEC ahead of the cartel’s next meeting. The IRS asserts that some of Coke’s income made in foreign markets should be recognized in the U.S. instead of overseas.