SINGAPORE – Oil prices hit their lowest since 2003 in early trading on Monday, as the market braced for a jump in Iranian exports after the lifting of sanctions against the country at the weekend.
On Saturday, the United Nations nuclear watchdog said Tehran had met its commitments to curtail its nuclear programme, and the United States immediately revoked sanctions that had slashed the OPEC member’s oil exports by around two million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than one million bpd.
“Iran is now free to sell as much oil as it wants to whomever it likes at whatever price it can get,” said Richard Nephew, programme director for Economic Statecraft, Sanctions and Energy Markets at Columbia University’s Centre on Global Energy Policy.
Iran is ready to increase its crude exports by 500 000 bpd, its deputy oil minister said on Sunday.
International Brent crude LCOc1 fell to $27.67 a barrel early on Monday, its lowest since 2003, before recovering to $28.25 by 0103 GMT, still down more than two per cent from their settlement on Friday.
U.S. crude CLc1 was down 58 cents at $28.84 a barrel after hitting a 2003 low of $28.36 earlier in the session.
“The lifting of sanctions on Iran should see further downward pressure on oil and commodities more broadly in the short term,” ANZ said on Monday.
“Iran’s likely strategy in offering discounts to entice customers could see further downward pressure on prices in the near term,” it added.
Iran’s potential new exports come at a time when global markets are already reeling from a chronic oversupply as producers pump a million barrels or more of crude every day in excess of demand, pulling down crude prices by over 75 per cent since mid-2014 and by over a quarter since the start of 2016. (Reuters)
