New pressure on energy prices
Iran adds to oil glut after sanctions lifted
Oil fell below $29 a barrel as investors anticipate Iran lifting output, adding to the existing oversupply.
Brent crude slipped to $28.94 a barrel after hitting $28.82, the lowest since February 2004.
It had risen on Thursday for the first time in eight sessions but has now lost more than 20% this year, the worst start to a year since 2008 and supporting warnings by RBS analyst Andrew Roberts earlier this week.
Some traders are forecasting a small bounce to take the price back into the mid-30s next week as they close short positions.
The United Nations tonight confirmed that Iran has curtailed its nuclear programme, paving the way for the unfreezing of billions of dollars of assets and an end to bans that have crippled its oil exports.
Iran is expected to hike exports of oil and is thought to be targeting the Indian and European markets. This could mean that any uplift in the price will be short-lived and traders are predicting it to fall again to around $25. Tehran plans to raise exports initially by 500,000 barrels per day.
It is reported that Iran has 13 fully or almost fully loaded carriers carrying enough crude to meet India’s import needs for almost a week.
Iran has the world’s fourth-biggest proven oil reserves. Indian refiners will take more from Iran to meet demand which soaring 10% a year, mainly on the growth in car sales, a rate that is now faster than China’s.
Europe is also poised to buy more oil from Iran. Former clients of the country are the ones who are likely to return as buyers. Italy, Spain and Greece were the top EU importers in 2011.