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Can OPEC avoid breaking up?

Published Wednesday, January 6th, 2016

What are we to make of the beginning of 2016 for oil? The answer is that it gives plenty to worry about whether you are a bull or a bear:-

— The continuation of poor economic data from China bodes badly for Chinese and emerging market oil demand.

— On the other hand rising tensions between two countries producing over 13 mbpd of oil between them raises concerns about supply disruptions.

— But, the complete breakdown in relations between Iran and Saudi Arabia puts the chances of any production co-operation at zero and a fierce battle for market share a certainty.

— However, the rising tensions and US threat of new non-oil sanctions related to Iran’s ballistic missile programme could delay the lifting of oil sanctions.

Adding a further complication appears to be a change of attitude by the Iranians towards maximising production. Leading up to the New Year the Iranian oil minister repeatedly said that Iran would rapidly return to pre-sanction export levels no matter what the price. Since New Year the director-general of the NIOC has toned down the message saying that Iran “will exercise great caution to prevent a further decline in international prices” and “will adjust our output to the global markets demand”.

to read the rest of the report, please click here

Posted by David Hufton