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 Benchmark global oil prices took a fresh hit on Friday with the
market bracing for more supplies from Iran earlier than expected.
The Organization of the Petroleum Exporting Countries said the price
of a basket of crudes produced by its 13 members was assessed at
$25.69 on Wednesday.
Iran expects the United Nations nuclear watchdog to confirm on
Friday it has curtailed its nuclear program, paving the way for the
unfreezing of billions of dollars of assets and an end to bans that
have crippled its oil exports.
For the past 18 months, oversupply has been the main factor
responsible for dragging down prices by two-thirds, after Saudi
Arabia led OPEC in a shift of its policy by deciding against cutting
production to support prices.
Low prices have also spurred global demand to multi-year highs, but
just as Saudi Arabia's strategy was showing signs of success, the
United States has lifted a decades-old ban on its oil exports and
Iran is bracing to boost output after lifting of the sanctions,
adding to bearish sentiment in oil market.
Gulf oil sources have been skeptical about a quick return of Iranian
barrels and Tehran's ability to raise production as swiftly as it
says it can. They have expected sanctions to be lifted by the end of
March with around 200,000-300,000 barrels per day of extra
production flowing from Iran later this year.
Some now see oil prices falling further to around $25 a barrel.
Brent was trading at $29.53 on Friday at 10.23GMT. [O/R]
OPEC's Reference Basket of Crudes (ORB) is made up of: Saharan Blend
(Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia),
Iran Heavy, Basra Light (Iraq), Kuwait Export , Es Sider (Libya),
Bonny Light (Nigeria), Qatar Marine, Arab Light (Saudi Arabia),
Murban (UAE) and Merey (Venezuela).
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Saudi Arabian oil minister Ali al-Naimi has said that growing global
demand could absorb an expected jump in Iranian production this
year.
Tehran plans to lift production by 500,000 barrels per day (bpd)
post-sanctions and gradually raise shipments by the same amount a
few months later.
Tehran is expected to target India, Asia's fastest-growing major oil
market, as well as its old partners in Europe with the increased
exports.
China’s state-run oil refiner Sinopec Corp has purchased its first
ever batch of U.S. crude oil for export, a source told Reuters on
Thursday, a landmark transaction after the ending of a four-decade
ban on domestic exports.
(Reporting by Rania El Gamal, editing by William Hardy)
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