Oil prices continue to take a beating with the cost of a barrel plummeting to below $35 a barrel in New York for the first time since February 19, 2009. Oil futures have fallen to 2.7 percent, with a barrel of crude fetching only $34.67. This represents a total fall of 11 percent in a week, the largest drop in a year.
Surprisingly as those in the oil business consider how to halt the fall, Iran's deputy oil minister for international and commerce affairs, Amir Hossein Zamaninia, says there is “absolutely no chance” Iran will delay its plan to increase shipments even as prices decline. His comments add fuel to rumours that the Organization of Petroleum Exporting Countries (OPEC) members will “exacerbate the global oversupply”.
As oil prices dropped last week speculators increased bets on crude oil prices falling to an all-time low after OPEC effectively abandoned production limits. Experts say oversupply will continue into late 2016 as "demand growth slows" and OPEC shows “renewed determination” to maximize output.
The head of commodities research at Commerzbank AG in Frankfurt, Eugen Weinberg, says “Gloom nourishes gloom. The market is fully acknowledging that OPEC is no longer in price-control mode or providing a floor, and that the group is unlikely to change that strategy any time soon.”
U.S. Senate negotiators are close to finalizing a deal which for the first time in 40 years will allow unfettered crude oil exports. The only remaining obstacle to the deal is differing opinions on renewable-energy tax credits, which Democrats are demanding in return for signing off on the deal. Some lawmakers are demanding the extension of solar and wind tax credits for five years in exchange for lifting export restrictions that were set in place in the 1970's to counter energy shortages.
Iran, which will see trade sanctions lifted next year in exchange for allowing closer monitoring of its nuclear program, is busy securing customers for its oil supplies. Zamaninia says his government is also preparing to offer natural gas and oil contracts to overseas investors.