Oil prices went down in March and now those are again on decline.
Crude prices from West Texas Intermediate are nearly again below $45 per barrel while Brent too, is also changing the lowest prices since it was spring. Question is what causes the latest drop?
Demand
Looking at the demand side, we can see China—the sole factor that looms over commodities throughout the world. Capital Economics commented suggesting to clients that the China’s stock markets are having problems and they have adverse effects on other markets too. Beyond that is China has more potential sellers than buyers but its purchasing manager index still is passing through trouble by staying above 50, which is basically the line between economic well ness and recession. On the other hand Chinese factories too have trend towards lower side.
Looking at the demand side, we can see China—the sole factor that looms over commodities throughout the world. Capital Economics commented suggesting to clients that the China’s stock markets are having problems and they have adverse effects on other markets too. Beyond that is China has more potential sellers than buyers but its purchasing manager index still is passing through trouble by staying above 50, which is basically the line between economic well ness and recession. On the other hand Chinese factories too have trend towards lower side.
Supply
There had been a new trend by USA that they opted to use shale gas that caused lowering of oil prices in start of this year and Saudi Arabia tried hard to flood the market as an encounter to shale gas that was invading oil market. The scheme worked, and oil prices stabilized as American drilling companies shut down the oil rigs and slowed down oil exploration.
Those drillers are not alone in the market but Iran proved to be a sleeping oil producer giant tried to gear up its oil production after negotiating and finalizing nuclear deal with USA and allies.
Iran can increase its oil production by 500,000 barrels per day within seven days after the sanctions on Iran end. Within 30 days this production may increase to 1 million barrels per month. These reports are from Iranian official Islamic Republic News Agency quoting Zanganeh during an interview on state TV. Iran’s oil industry will be out of sanctions by end of November according to Iran’s ministry for oil.
That would mean more competition for Saudi Arabia as well as the Unites States of America. If all goes well as announced and planned, Iran is all geared for oil production to a level that has not been seen in past three years.
There had been a new trend by USA that they opted to use shale gas that caused lowering of oil prices in start of this year and Saudi Arabia tried hard to flood the market as an encounter to shale gas that was invading oil market. The scheme worked, and oil prices stabilized as American drilling companies shut down the oil rigs and slowed down oil exploration.
Those drillers are not alone in the market but Iran proved to be a sleeping oil producer giant tried to gear up its oil production after negotiating and finalizing nuclear deal with USA and allies.
Iran can increase its oil production by 500,000 barrels per day within seven days after the sanctions on Iran end. Within 30 days this production may increase to 1 million barrels per month. These reports are from Iranian official Islamic Republic News Agency quoting Zanganeh during an interview on state TV. Iran’s oil industry will be out of sanctions by end of November according to Iran’s ministry for oil.
That would mean more competition for Saudi Arabia as well as the Unites States of America. If all goes well as announced and planned, Iran is all geared for oil production to a level that has not been seen in past three years.
