The global oversupply of crude will decline this year even after Iran adds an expected 500,000 barrels a day in oil output, United Arab Emirates Energy Minister Suhail Al Mazrouei said.
Oil prices are fluctuating on speculation about the potential impact of more Iranian crude entering the market this year after the lifting of economic sanctions, Al Mazrouei said on his Twitter account. Iran has pledged to boost output by 500,000 barrels a day immediately after the sanctions are removed and by up to 1 million a day within a year.
“Iran’s possible production increase of 500,000 barrels a day this year won’t be enough to meet the expected demand,” Al Mazrouei said. “It’s difficult to see where the new oil supply is coming from this year to fill the expected annual demand increase of at least 1.3 million barrels a day.”
Benchmark Brent crude fell for a third year in 2015 and a further 13 percent this year amid the global glut. Brent for March settlement fell as much as 54 cents, or 1.6 percent, on Thursday and was was trading at $32.63 a barrel at 7:06 a.m. in London.
“Amid current prices, we should not ignore the possibility of a larger decrease in production from countries outside OPEC that are currently incurring losses,” he said. “The fluctuations in prices in the market are not linked to supply and demand, but are driven by speculators and their concern about the impact of a production increase by Iran.”-Bloomberg