Brent crude fell below $28 a barrel in Asia on Monday for the first time in more than 12 years on fears about a worsening supply glut after Western sanctions on Iran were lifted, allowing Tehran to resume oil exports.<\/p>\n
Up to half a million barrels per day of Iranian crude could be added to already saturated markets after US and European leaders ended a crippling embargo put in place over Tehran’s nuclear programme.<\/p>\n
[contextly_sidebar id=”lWId1RNrGHEiWoGK6z42CmGrtOWJTx0B”]The news led to further selling of the black gold, which has fallen by about three quarter since mid-2014 owing to the supply glut, record output levels, weak demand and a slowing global economy<\/p>\n
Brent for March delivery tumbled to as low as $27.67, or by 4.4% from Friday’s close, before rebounding to trade at above $28. The last time Brent closed below $28 was in November 2003.<\/p>\n
At around 04:50, the contract was trading 39 cents, or 1.35%, lower at 28.55. US benchmark West Texas Intermediate for delivery in February was down 30 cents, or 1.02%, at $29.12.<\/p>\n
“The drop was due to the Western sanctions on Iran being lifted. This means we will be seeing a bigger oil glut with Iranian crude exports coming back to the market,” said Phillip Futures analyst Daniel Ang.<\/p>\n
He said prices rebounded on some bargain-buying.<\/p>\n
The United States and European Union lifted the sanctions on Sunday after the UN’s atomic watchdog confirmed that Iran had complied with its obligations under a landmark deal in July to curb Tehran’s nuclear programme.<\/p>\n
Ric Spooner, chief market analyst at CMC Markets in Sydney, said that while Iranian oil could come in quickly, suppliers still needed to find buyers.<\/p>\n
Downward pressure<\/strong><\/p>\n “Iran has quite a large storage of oil at the moment. They are in a position to sell that if they choose to do so and increase supply quite quickly,” Spooner told AFP.<\/p>\n But “they’ve got to get the buyers and that’s one of the key questions”, he said.<\/p>\n “I think Iran’s main priority is going to be re-establishing its customer base and re-establishing its market share. They will want to be doing good, sound, attractive deals for their customers.”<\/p>\n Ang added that Iran is likely to sell first the oil it has in its storage facilities before considering to ramp up production.<\/p>\n “They were telling the market that they have quite a bit in storage. Over the longer term, I don’t know how much more they can produce considering prices are so low,” he told AFP.<\/p>\n Singapore’s DBS Bank said in a research note that adjusted for inflation oil is now cheaper than at any time since 1998, at the height of the Asian financial crisis.<\/p>\n DBS said expectations are that exports from Iran will grow by 300 000 barrels per day in the short term and rise to 500 000 barrels per day by mid-year.<\/p>\n “If it does, it would more than offset the roughly 300 000 barrels per day drop in US production seen over the past six months,” it said.<\/p>\n Analysts expect supply continuing to outrun demand over the next two years, which would keep prices low.<\/p>\n DBS said that over the past 18 months, the United States had been responsible for more than half of supply growth. Saudi Arabia accounted for only 4.0%, while Iraq and Brazil contributed 38%.<\/p>\n “If supply growth were cut to zero today, demand would not catch up with supply until January 2018,” DBS said.<\/p>\n “In the meantime, inventories would continue to grow and, at least from a fundamentals perspective, downward pressure on prices would remain.”<\/p>\n –<\/p>\n Credit:\u00a0 News24<\/p>\n","protected":false},"excerpt":{"rendered":" Brent crude fell below $28 a barrel in Asia on Monday for the first time in more than 12 years on fears about a worsening supply glut after Western sanctions on Iran were lifted, allowing Tehran to resume oil exports. Up to half a million barrels per day of Iranian crude could be added to […]<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"jnews_override_counter":[],"footnotes":""},"categories":[32,170],"tags":[],"class_list":["post-182474","post","type-post","status-publish","format-standard","hentry","category-business","category-oil-and-gas"],"_links":{"self":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/182474","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=182474"}],"version-history":[{"count":0,"href":"https:\/\/citifmonline.com\/index.php?rest_route=\/wp\/v2\/posts\/182474\/revisions"}],"wp:attachment":[{"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=182474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=182474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/citifmonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=182474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}