Players debate impact of Iranian nuclear deal on global oil markets
Sanctions against Iran are likely to be lifted later in the year once the International Atomic Energy Agency (IAEA) has verified Iranian compliance with provisions of the deal calling for Iran to downgrade its nuclear capacity and open its nuclear facilities to international inspectors. According to media reports, Iranian foreign Minister Javad Zarif predicted that Iran would fulfill its commitments by November while US Secretary of State John Kerry predicted that sanctions against Iran would be lifted in around six months.
Once sanctions are lifted, Iranian Oil Minister Bijan Namdar Zanganeh predicted that Iran would be able to expand its oil production by around 500,000 barrels per day (bpd) immediately after sanctions are lifted and by another 500,000 bpd six months later, although some analysts consider these targets to be overly optimistic.
According to a report from Goldman Sachs, the bank predicts the feasible increase in Iranian oil production following the lifting of sanctions to be closer to 200,000 to 400,000 bpd. The bank added that it did not expect additional Iranian supply to have a major impact on global oil markets in 2015, although the bank lists increased production as a downward risk factor for its 2016 oil price forecast. The bank called for average NYMEX crude prices of $52/barrel in 2015 and $57/barrel for 2016. Meanwhile, WoodMackenzie predicted that Iran might not be able to raise its production by more than 600,000 bpd through 2017 as reservoirs and production facilities may have suffered deterioration during the sanctions period.
In addition to possible downward pressure on oil prices from rising Iranian production, other OPEC countries are also maintaining their strategy of raising production to increase market share rather than cutting output to prop up prices. Ahead of OPEC’s next scheduled meeting in December, media sources report that the cartel is not planning to alter its strategy, with Kuwait’s Oil Minister predicting that rising demand tied to global economic growth would lift prices in the coming year. Saudi Arabia reported record high crude output of 10.6 million bpd in June while Iraq, OPEC’s second largest producer, also posted record high production levels of around 4.1 million bpd in June. Total OPEC production stood at just under 31 million bpd in May, according to OPEC’s monthly oil report.
Meanwhile, oil production in the US continues to expand in spite of a declining rig count as American producers have shifted to maximizing output from high performing wells while reducing capital expenditure on exploration and development of new wells. According to the US Energy Information Agency (EIA), production in the US stepped back from a record high level in March to stand at 9.7 million bpd in April, which was still the highest level seen since 1971. While the EIA predicts a decline in US production between April 2015 and February 2016, the agency nevertheless raised its forecasts for US oil production to an average of 9.47 million bpd in 2015 and 9.32 million bpd in 2016, up from its previous estimates of 9.43 million bpd in 2015 and 9.27 million bpd in 2016.
More free plastics newsPlastic resin (PP, LDPE, LLDPE ,HDPE, PVC, GPS; HIPS, PET, ABS) prices, polymer market trends, and more...
- Asian PVC sees V-shaped recovery in Q2, what will Q3 bring?
- Will capacity additions cast cloud on ethylene upsurge in Asia?
- US PVC offers in Egypt rise steadily but resistance grows in tandem
- PE buyers’ resistance grows in SEA; duty-free origins more competitive than Mid-East
- Polymer demand cools in Turkey: Is price correction ahead for PP, PE and PVC?
- Local PP, PE markets in Indonesia, Thailand, and Philippines follow imports higher
- Taiwanese major’s July PVC pricing exceeds initial expectations
- China’s rising PET trend takes a pause, but longer-term outlook remains firm
- Dalian Futures Market: PP, LLDPE, PVC, MEG
- Vietnam’s homo-PP market plunges to lowest since 2009