Oil fell again on Tuesday to $47.25 with mixed messages from Iran’s nuclear development talks.
Two days of talks in Switzerland on the proliferation of nuclear weapons in Iran have missed the Tuesday night deadline for agreement and will continue on Wednesday afternoon. According to Reuters the talks halted with ‘Iran and Russia expressing optimism that an initial agreement was within reach.’
Iran has always said that its nuclear programme is being developed for peaceful means but world powers want to ensure that weaponization is restrained. If the countries can find an accord, sanctions will be relaxed.
The crux of the talks over the last 2 days for oil is that if sanctions are lifted on Iran, oil will start flowing into an already glutted market and prices will fall further.
Facts & Figures on Iran oil:
Iran is a member of OPEC, and the OPEC current stance on oil is to continue with production levels to keep market share - even if the price of oil falls.
Iran holds approximately 10% of the world’s oil reserves.
If sanctions were weakened, around 1 million barrels a day could be exported from Iran as noted by Iran’s Oil Minister Bijan Namdar Zanganeh.
Following the 2012 restrictions, Iran’s oil exports were limited to about 1 million barrels a day. Iran’s International Energy Agency reports actual sales rising to about 1.2 million in February, from 780,000 barrels in January.
Iran is reported by Bloomberg to be storing a possible 7 million to as much as 35 million barrels of oil – U.S oil inventories currently stand at 8.17 million – global excess capacity stands at 1.5 million barrels per day.
If the sanctions on Iran are dropped, Societe General analysts are reported in Bloomberg to predict that oil will plummet another $5 per barrel.
Talks continue for another day but without French Foreign Minister Laurent Fabius who said he would ‘return from France when it was "useful"’ as reported by Reuters.
MT4 chart: OIL
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