Iranian oil price falls 9 cents per barrel in a week

Jan 17, 2017, 00:24

As the gap widens and prices rise, the region is projected to spend over $500 billion on importing oil this year.

The Organization of the Petroleum Exporting Countries (OPEC) agreed on November 30 to cut output by 1.2 million bpd to 32.5 million bpd for the first six months of 2017, in addition to 558,000 bpd of cuts agreed to by independent producers such as Russia, Oman and Mexico.

Saudi Minister of Energy, Industry and Mineral Resources Khalid Al-Falih's announcement on Thursday that the Kingdom has reduced its oil output to its lowest levels in two years has created a wave of cautious optimism.

The sultanate and Russian Federation were also named to the high-level monitoring committee set up by OPEC to oversee the implementation of production cuts.

This was in addition to 558,000 bpd of cuts agreed to by independent producers such as Russia, Oman and Mexico.

Saudi Arabia, the world's top oil exporter, told some Asian customers that it would reduce crude supplies slightly in February.

At the end of his remarks, the official disavowed the claims that Iran's oil revenues were blocked by certain countries concluding that "all profits from the sale of oil are being received smoothly". Drilling is on the rise in North American, while European and Chinese traders are shipping a record 22 million barrels of crude from the North Sea and Azerbaijan to Asia this month.

Total global LNG consumption is projected to be 422 million tons in 2030, nearly two-thirds higher than last year's level. The report offers the data based on drilled wells in the country. All in all, there is a lot of activity on the consumption as well as supply side, affecting oil prices.

Al-Sabban said prices would range between $55 and $60 per barrel, and the upcoming increase in United States shale oil would put a cap on oil prices of not more than $60.

Oversupply coupled with concern over a future decline in demand from countries which have traditionally been major oil consumers resulted in the price of oil falling to a level last seen more than a decade ago in January. Besides, as the president-elect takes office on January 20, uncertainty in Europe with regards to elections will emerge as a deterrent for oil market.

But some analysts are even more optimistic than OPEC, with Goldman Sachs expecting compliance at 84 percent and Energy Aspects oil analyst Virendra Chauhan expecting compliance at 80 percent. Investors should consult financial advisers before investing.

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