IRAN NOT TO REDUCE OIL PRODUCTION, PRICES TO REMAIN BEARISH

In an attempt to stabilize oil prices, Saudi Arabia, the leading oil producer and Russia have agreed to revert their production to January levels if other oil-producing countries follow suit — Iran and Iraq declined participation in this agreement. Besides Saudi Arabia and Russia, Venezuela and Qatar have agreed to reduce production marginally to salvage the present oil situation.   The sanctions imposed on Iran in the past, kept it out of the global energy market for a significant period and hence the country lost market share. By not participating in the production freeze, Iran is looking to gain some of the lost market share. Iran plans to ramp up its oil production and bring in an additional 1 MBPD into an already oversupplied global market.   The additional oil output will keep oil prices bearish. There is also a high possibility that the potential oil freeze fails to stabilize prices because oil supply will continue to be significantly more than the demand levels. If no production cuts are in place, oil prices might breach the $25/BBL in near future.

In an attempt to stabilize oil prices, Saudi Arabia, the leading oil producer and Russia have agreed to revert their production to January levels if other oil-producing countries follow suit — Iran and Iraq declined participation in this agreement. Besides Saudi Arabia and Russia, Venezuela and Qatar have agreed to reduce production marginally to salvage the present oil situation.

The sanctions imposed on Iran in the past, kept it out of the global energy market for a significant period and hence the country lost market share. By not participating in the production freeze, Iran is looking to gain some of the lost market share. Iran plans to ramp up its oil production and bring in an additional
1 MBPD into an already oversupplied global market.

The additional oil output will keep oil prices bearish. There is also a high possibility that the potential oil freeze fails to stabilize prices because oil supply will continue to be significantly more than the demand levels. If no production cuts are in place, oil prices might breach the $25/BBL in near future.

Energy & Utilities

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