Members of Organisation for Petroleum Exporting Countries, OPEC, are beginning to panic after Iran declared on Saturday that it would increase its oil export production by 500,000 barrels per day.
Since the sanction was lifted, oil prices hit their lowest since 2003 on Monday.
The United States and European Union on Saturday revoked sanctions that had cut Iran’s oil exports by about 2 million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than 1 million bpd.
Despite repeated warnings and pleadings by OPEC, Iran, also a member of the Organization of the Petroleum Exporting Countries (OPEC), insisted on Sunday that it would go ahead with export increase.
Worries about Iran’s return to an already oversupplied oil market drove down Brent crude LCOc1 to $27.67 a barrel early on Monday, its lowest since 2003. The benchmark was at $28.59 by 0921 GMT, down 38 cents from its settlement on Friday.
As at Friday, January 15, OPEC’s daily basket price stood at $24.74 a barrel, and analysts still predict a drop to $10 as Iran starts pumping more oil into the market.
U.S. crude CLc1 was down 38 cents at $29.04 a barrel, not far from a 2003 low of $28.36 hit earlier in the session.
“Iranian export is coming at a very bad time,” analysts at Barclays said.
The ban cut the country off with nearly 80 million population from the global financial system, drastically reduced the exports of a major oil producer and imposed severe economic hardship on ordinary Iranians.
In retaliation, Iran wants the world to feel the hardship it suffered through the years of denial, as the country sees its recent freedom as a means of making more money and boosting the economic standard of its people through increased export.
What this means for OPEC members, is untold hardship as it is presently being experienced, with members countries already cutting down on developmental projects and continuous fall in the value of their currencies. For, instance the official value of the naira, Nigeria’s currency is presently N196.5k to one dollar but it traded at about N297 to the dollar in the parallel market.
Credit : Today.ng
