Financial Mirror – 03 April, 2015- Prices for the two benchmark crude oils fell by 2% to 4% on Thursday, as a ‘framework’ agreement with Iran was reached in Lausanne leading to a conclusive nuclear monitoring deal by June.
Crude oil prices have been under pressure from the beginning of the week, with North Sea Brent dropping 3.8% to $54.95 on Thursday and the US-benchmark WTI retreating by 2% to $49.14 a barrel, less than half their summer 2014 levels.
Despite the positive news, that is expected to lead to the removal of sanctions on Iran, oil output by the OPEC member is not expected to increase any time soon, at least not in 2015, according to reports from Tehran. Sanctions more than halved Iran’s exports from 2.5 mln bpd in 2012 to 1.1 mln last year a tensions rose over non-inspection of nuclear plants, fuelling fears of bomb-building capability.
However, the pressure of anticipated output increase could keep oil prices at current levels, if not lower, with the biggest impact being on export revenues for Russia.
Already, exploration and auxiliary companies have been hurt by the depressed prices, as this leave little margin for earnings, forcing many oil majors to cut back on exploration programs, as OPEC-price driver Saudi Arabia keeps on pumping crude in an effort to counter the cheaper prices from shale gas and fracking, particularly in North America. OPEC members are also reportedly keeping some 30 mln barrels of crude floating in tankers, ready to flood the markets with further supply.
