Economists estimate that the Iranian crude output may increase at a faster pace after removal of sanctions
BP plc (ADR) - (BP) on March 25th was trading at a stock price of $39.51 after being down at by 1.57% at -$0.63, during trading hours. Brent crude plummeted nearly 2% below $62 per barrel on Monday due to stronger dollar and reports which suggested that Libyan oil production will increase. Furthermore, Iran's statement seeking agreement about nuclear program, which could lifts sanctions on the country, would upsurge its crude oil.
Brent, the benchmark index for global crude oil prices, plunged by $1.28 to $61.8 per barrel and it was at $61.3 earlier in March. Future of Brent (LCOc1) climbed 18% last month, which is the highest monthly increment in almost six years.
West Texas Intermediate (WTI), the benchmark used to determine crude prices in the US, slid $0.95 to $48.81 per barrel.
Stronger Dollar
The dollar climbed the most in 11 years against the basket of major currencies, as a cut in Chinese discount rate, which reduced the value of yuan against dollar, and growing speculations that Fed will increase the bench mark rates in the US, boosted the dollar.
The dollar index, dollar against a basket of major currencies, jumped up to 95.5 today, which is the utmost point since September 2003. After the most sluggish economic growth in 2014 in a decade and the rate cuts in China, the dollar climbed two-year high against yuan.
Dollar was appreciated due to depreciation of Kiwi and Australian dollar. Due to growth issues, Kiwi dollar has been down in recent weeks; however, cut in Chinese interest rates gave some cushion to the currency.
Libyan Crude Supply
In first two months of this year, crude received cushion from Iraq and Libya, two members of Organization of the Petroleum Exporting Countries (OPEC), as both of the countries lowered their crude production. However, recent reports suggested that Libyan crude production has increased over 400,000 barrels per day (bpd).
Upsurge In Iranian Oil Exports
Earlier today, the Foreign Minister of Iran, Mohammad Javad Zarif said in a statement, "If there is the political will to accept that agreement and sanctions cannot go together, then we can have an agreement this time."
The US and the European countries put sanctions on Iran for seven years, which restricted it from exporting oil, due to its nuclear program issues. The West believes the program has been initiated to create atomic weapons, while Iran claims that its nuclear program is peaceful.
Economists estimate that the Iranian crude output may increase at a faster pace after removal of sanctions and upsurge in its exports by nearly 1 million bpd. According to Thomas Reuters survey, Iran produced about 2.8 million bpd of oil during February.
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