The possible lifting of sanctions against Iran as early as next year – setting the stage for the return of the country’s oil exports – may spark a “price war” within OPEC as rival producers try to compete with heavily discounted crude offered by Tehran, CNBC reported on November 5.
International sanctions aimed at curbing Iran’s nuclear program have more than halved the country’s oil exports to about 1 million barrels a day since the beginning of 2012. But a recent thaw in relations with the West under a more moderate leadership led by President Hassan Rouhani who took office in August has raised expectations that the embargo may be rolled back.
Though this may free up oil exports only months later, some oil strategists warn it could add extra volume to an already saturated market, depressing prices and unsettling the Organization of Petroleum Exporting Countries (OPEC), which pump more than a third of the world’s oil.
“The market is currently ‘missing’ approximately 1 million barrels per day of Iranian oil, which is not actually needed in view of the ample supply in the oil market,” Commerzbank strategist Barbara Lambrecht wrote in a report on Monday.
Dr Abhishek Deshpande, oil markets analyst at Natixis, says that there could be a downward outlook for oil prices if sanctions on Iran are lifted.
“If sanctions are relaxed, Iran will have to make substantial price concessions, which could lead to a price war among oil producers in the battle for market share,” she said. Commerzbank this week cut its Brent crude forecast for 2014 to $106 a barrel from $115 previously.
SOURCE: CNBC, 2013 ………….READ MORE………………