Global oil prices are set for a continued free fall this week after Iran said it was ready to add half a million barrels a day to crude exports after international sanctions were lifted this weekend.
The prospect of Iran pumping the market with more crude had already hit prices last week, pushing Brent crude below $30 a barrel, to $29.20 by Sunday, January 17.
Iran’s return to the international oil market may worsen the global oil glut as the country looks to ramp up its crude oil exports with estimated 500,000 barrels per day.
Iran’s president, Hassan Rouhani, lauded a “glorious victory” as his country relished reconnecting to the global economy following the formal announcement, late on Saturday, that sanctions were ending thanks to moves by Tehran to scale back its nuclear programme.
Echoing Friday’s sell-off on commodity and global stock markets, shares in the Middle East tumbled yesterday.
Saudi Arabia’s Tadawul index plunged more than 6% as the latest drop in crude prices intensified worries over the economic outlook for the major oil producer.
In Egypt, shares extended last week’s losses on broader worries over emerging markets and the EGX 30 index was down 3%.
The lifting of sanctions includes an end to an EU embargo on imports of Iranian oil and yesterday the country confirmed it was geared up to raise exports.
“With consideration to global market conditions and the surplus that exists, Iran is ready to raise its crude oil exports by 500,000 barrels a day,” the deputy oil minister, Amir Hossein Zamaninia, was quoted as saying by the Shana news agency.
Oil prices have almost halved in the last six months amid concerns about oversupply and reclining demand on the back of a weaker global economic outlook and a downturn in China, the world’s biggest energy user.