According to the recent report released by National Iranian Oil Company, Iran decided to cut the oil prices for its European importers earlier in February. According to the price list, the discount for Western Europe is $4,85 per barrel relative to the weighted average price of Brent oil. For the sake of comparison, January’s discount was $4,3 dollars per barrel. At the same time, it is expected that the the discount for the heavy oil is going to reach $6,5/b in March 2016.
However, amid oil prices discounts for Europe, Iran is going to raise the price for Asia. Experts say that the price discounts boil down to Iran’s desire to show the world that it is ready and determined to compete with its major rival – Saudi Arabia.
For those of you who don’t know, Western nations canceled most of the sanctions imposed on Iran several years ago regarding its nuclear program. Now, when the sanctions are done away with, Iran is about to come back to the global market of crude oil as a heavyweight and a major player. With that being said, most experts out there are concerned over the likelihood that Iranian oil is definitely going to increase the excessive oil supply, thereby exerting even greater pressure on oil prices.
At the same time, Iran refuses to back Venezuela ’s aspiration to suspend the oil downtrend. You see, Venezuela is 90% dependent on oil exports, which leads us to believe that its economy is on the brink of crashing while the country’s president is likely to lose its power in the near future. Still, Iran doesn’t care and it is not interested in contributing to the recovery of oil prices at this point. On the contrary, Iran is trying to dump the prices even lower t oust some of tis rivals and win back the lost market share.
As you may know, Brent oil saw its price cross the $30/b line and go further down to new major lows on January, 19. A day later, Brent and WTI plunged to $28,2/b and $28,72/b respectively. Now, Iran seems to be a major driver for the global market of crude oil. The country has been heavily increasing its oil production ever since January, 16 – the day when Western sanction were canceled. Iran promises to increase its oil export by 500K barrels a day in a matter of weeks if not days. Over the next 12 months, Iran is planning to boost the production by an extra 1 million barrels a day. For now, the oversupply is some 2 million barrels a day… and it is definitely going to expand.
