Crude prices continued their slide on Monday, coming close to their 11-year low, and are trading below $35 US a barrel. On Friday, the International Energy Agency (IEA) said that the global supply glut was likely to deepen next year and put more pressure on prices, Reuters reported.
OPEC supply is likely to increase by 1 million bpd next year, Morgan Stanley analysts said in a research note on Monday. “Almost the entirety of added supplies in 2016 will come from Iran, Iraq and Saudi,” it said.
Oil has been battered by a constant barrage of negative outlooks. The latest catalyst is weekend comments from deputy oil minister of the Iranian regime that there is “absolutely no chance” they will hold off on production to keep prices up while it re-enter the market.
Oil’s problem has hinged on oversupply, a situation that would be exacerbated when Iran is once again allowed to start selling oil to the world, after the UN lifts sanctions, sometime in 2016.
Once sanctions are lifted, a few million more barrels of oil will flow into the market daily. The oil market is currently oversupplied to the tune of about three million barrels a day.
