Oil nears 7-year low on higher supply

OPEC leaves ‘de facto’ output unchanged

Brent crude was down almost 50 cents trading at $37.47 a barrel by 11:06am GMT on Monday while US benchmark WTI plummeted 30 cents to $35.31 per barrel.

There’s “absolutely no chance” Iran will delay its plan to increase shipments even as prices decline, Bloomberg cited Amir Hossein Zamaninia, Iran’s deputy oil minister as saying. Tehran which expects international sanctions over its nuclear program to be lifted early in January, aims to double crude exports. The country currently exports 1.1 million barrels per day.

Oil prices could slump to $30 per barrel in 2016 and could stay low throughout the year, said Russian Finance Minister Anton Siluanov, warning of tough times ahead.

READ MORE: Iran aims to boost oil exports without OPEC’s blessing – minister

According to the head of Russia’s Central Bank the average crude price for next year would be $35 per barrel. Elvira Nabiullina said that at that price Russian GDP would fall by two to three percent along with investment and real wages.

The International Energy Agency’s report last week added to the concerns as it warned the global oil glut would persist at least until late 2016 with oversupply and slowing demand.

According to the Telegraph’s Liam Halligan, the slump in oil prices reflects supply patterns driven almost entirely by geopolitics that could quickly shift. Just as fast as crude prices have fallen over the past year or so, they “could easily spring back again,” Halligan writes.

“Then there’s Russia, outside OPEC and constantly vying with the desert kingdom to be the world’s biggest oil producer. An OPEC production cut, the increasingly paranoid Saudis’ fear, would make yet more room for Russian crude,” Halligan added. Moscow is “less bothered about cheap oil than Riyadh – given that, in ruble terms, prices have not fallen so far,” he said.

Halligan’s analysis echoes experts who say the low oil price may have had no impact on Russian output, which is currently hovering at post-Soviet record levels. Russian crude production reached 10.77 million barrels per day (bpd) in October with 5.32 million bpd destined for export.