“And with Iran back as a full player in world oil markets, the previously unthinkable — sub-$20-a-barrel crude — is looking more possible.
Iran’s oil ministers say they intend to boost their oil production and ship 500,000 barrels a day initially, now that sanctions have been lifted in light of nuclear inspections deal, the Islamic Republic News Agency reported. Iran’s goal is 2 million barrels a day.
Eshaq Jahangiri, Iran’s First Vice President, said Monday that his nation’s oil exports will increase soon and grow further “on a daily basis,” the news agency also reported.
The higher production levels alone are big enough to further depress the price of oil, especially since Saudi Arabia has refused to cut its production levels.
The result could lead to oil prices in the mid-$20s a barrel, and with occasional bouts of panic selling, briefly dip into the teens, said Tom Kloza, global head of energy analysis for the Oil Price Information Service.
Oil already plunged past one key threshold last week, falling past $30 a barrel. West Texas Intermediate, the benchmark U.S. crude, closed Friday at $29.42, down $1.78 for the day. Brent crude, an international benchmark, closed at $28.94, down $1.94. The low oil prices are reflected in the price of gasoline, which dipped Sunday to $1.90 a gallon nationally, down almost 7 cents in a week, according to AAA’s Fuel Gauge Report.
“The expectation is we’re going to plumb new lows. Every oil investor and trader worth his salt has anticipated it,” Kloza said.”