25 November 2013 05:55 [Source: ICIS news]
By James Dennis
SINGAPORE (ICIS)--Crude prices fell sharply on Monday, with ICE Brent crude futures falling by more than $2/bbl, on easing supply concerns following a deal between leading world powers and Iran to halt Tehran’s nuclear programme.
At 05:25 GMT, January Brent crude on London’s ICE futures exchange was trading at $108.56/bbl, down by $2.49/bbl from the previous close. Earlier, the North Sea benchmark fell to a session low of $108.31/bbl, down by $1.20/bbl.
January NYMEX light sweet crude futures (WTI) were trading at $93.82/bbl, down by $1.02/bbl from the previous close. Earlier, the US benchmark hit a low of $93.64/bbl, down $1.71/bbl.
It is hoped that the deal agreed in Geneva over the weekend will help alleviate concerns held by the US and other leading world powers over Iran’s nuclear programme, and halt what they believe is Tehran’s plan to develop a nuclear weapon.
Under the terms of the deal Iran will be able to increase its oil exports after six months. Iranian oil exports have been markedly reduced since the imposition of tighter sanctions and an EU oil embargo in July 2012.
According to data from the International Energy Agency (IEA), Iran’s oil exports in October totalled some 715,000 bbl/day and averaged around 1.1m bbl/day in the first nine months of 2013.
Most of Iran’s exports are to customers in Asia, principally China, Japan, South Korea and India.
Prior to the imposition of tighter sanctions, Iran was the world’s third largest oil exporter.
In early 2012, Iran’s oil exports totalled around 2.5m bbl/day. Oil sales at that time accounted for 80% of the nation’s export earnings and over half of the its revenue.
Iran was the second largest producer in OPEC and the world’s fourth-largest oil producer, with a crude output of around 3.5m bbl/day. Production was running at around 2.68m bbl/day in October this year according to the IEA.
In the past, Iran has also threatened to blockade oil shipments through the Straits of Hormuz. Oil shipments from Saudi Arabia, the UAE, Kuwait, Iraq and Iran totalling around 17m bbl/day pass through the straits. This volume represents 35% of all seaborne traded oil and 20% of oil traded worldwide.
($1 = €0.74)
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