Unexpectedly for many of us, it is reported that Iran is planning to participate in the forthcoming oil summit in Algeria. The summit is going to take place in late September 2016. This makes us ponder upon the following questions:
What has actually changed since the last oil summit in Doha this spring? Why is Iran going to participate in the summit this time?
For those of you who don’t know, we feel like reminding you that earlier this year, Saudi Arabia urged Iran to going the discussions aimed at freezing oil production worldwide to make oil prices stabilize and go higher for the exporters to enjoy higher profits from their oil exports. Back then, Iran rejected this idea and ignored the summit. At that time, everyone was thinking that Iran was not going to even think about any production cuts until it reaches and exceeds the production levels seen before the Western sanctions imposed in Iran over its nuclear program.
At the same time, further production growth is questioned since it requires billion-dollar investments. With oil prices being below $50/b from time to time, big oil companies don’t seem to be able to afford this kind of spending. At the same time, more than 50% of Iranian oil fields are mature, which means that most of them will be forced to start cutting their production by 10% a year on average.
Meanwhile, we should be mentioned that Saudi Arabia cannot finance its budget inflated with social spending with oil prices around $40/b. This leads us to believe that both of them are interested in higher oil prices in the near future. Also, if the Doha scenario repeats itself this time, Saudi Arabia’s leadership will be questioned. That’s why the likelihood of approving production cuts is growing new like never before. The question is at what cost it will eventually come.
According to the SRP Department (AO_Zotik and WPR_VSmark) of Masterforex-V Academy, when looking at the Weekly chart of Brent oil with the help of the SRP tools, we can see an upswing of level Daily. The price has already formed wave B against it. If there is no complicating the wave, we may well expect another move up to 57,25, the experts say.
