According to a recent market report available from Research and Markets, Iran's crude oil production and exports will increase by around 600 000 bpd by the end of 2016. This substantial increase is due to the lifting of sanctions, allowing Iran to trade freely with Europe, and other members of the West. Iran's re-entry into the global oil market has led to a drop in prices, which continues as Iran prepares its first European oil export since sanctions ended.
Oil prices continue to drop to below US$30/bbl as the effects of Iran's return to global oil production are felt worldwide. West Texas Intermediate recorded a 1.7% fall in prices on Friday, while Brent in London reported a 2.1% drop. Oil prices in New York have dropped by around 21% since the start of the year, and China's crude imports are the lowest in three months due to an abundance of stockpiled fuel.
The availability of inexpensive Iranian oil will ensure low global oil prices for the foreseeable future. The global crude oil refining industry capacity is expected to reach nearly 115 000 bpd by 2020, as noted in a recent industry report, suggesting a saturated crude oil market. However, the lifting of sanctions will have a positive effect and promote growth in related industries. For instance, the Middle East well intervention market is expected to reach US$2.4 billion by 2018, as noted in a recent report.
Numerous European companies will seek to take advantage of Iran's once again booming oil industry, even if at the expense of a stable global oil market price.
Adapted from press release by Francesca Brindle
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