The Embargo Lifted In Iran Could Further Drop Oil Prices



Tehran streets were crowded with people last night, celebrating the lifting of the sanctions imposed by the international community, after several years of isolation. The new agreement is a result of the difficult negotiations held in Lausanne, Switzerland, and it promises a new chance for the Iranian economy. Iran has suffered the inflation of a whopping 45%, with sluggish economic growth and non-existent foreign currency earnings.
Now that the embargo has been lifted, this 78 million people market immediately became a potential Mecca for foreign investors, looking to penetrate the untapped market with enormous potential. The central stage is definitely going to be taken by the companies in the energy industry, as Iran possesses a little under 9% of total world oil reserves. The country is also extremely rich in natural gas, and the oil and gas global markets are about to be shook.
With the hyper production of oil by the OPEC countries already pushing the crude oil prices under 50 U.S dollars per barrel, the reintroduction of Iran on the market could lead to all-time lows in oil prices. Iran is estimated to have over 35 million barrels of crude oil stored, and if the global market is flooded with that amount of crude oil, the price per barrel is likely to go as low as 20 U.S. dollars! The world oil production could be lifted by 1 million barrels per day, in only a few months’ time.
Compared to the last year’s oil prices, when crude oil reached 115 U.S. dollars per barrel in June, the current price of just below 50 U.S. dollars per barrel is a huge difference, and with the Iranian oil back in market, it is realistic to expect the 20 U.S. dollars per barrel oil prices in June 2015

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