Global oil prices could be $5 to $15 lower than predicted if Iran’s oil export sanctions are lifted, the U.S. government’s energy agency said in its new monthly report.
“A lifting of sanctions against Iran should a comprehensive nuclear agreement be concluded could significantly change the forecast for oil supply, demand, and prices,” Adam Sieminski of the Energy Information Administration (EIA) said in a statement.
The EIA left its forecast unchanged predicting Brent to stay at around $59 a barrel this year and $75 next year but warned of oil price downgrades in 2016 should Iran return to the market.
Iran is believed to hold at least 30mn barrels of crude in storage and could ramp up crude production by at least 700,000 barrels per day (bpd) by the end of 2016.
Prior to sanctions, it was the world’s fifth-largest oil producer and if restrictions on its exports are lifted or eased, many fear the Islamic republic would put supply back into the market and send prices down.
Meanwhile, the EIA cut its US crude oil production growth forecast for 2015 to 550,000 bpd, versus 700,000 bpd in its March forecast, while the 2016 growth forecast was lowered to 80,000 bpd from 140,000 bpd a month ago.
“U.S. crude oil production is expected to peak this year in the second quarter and then decline in the third quarter, before picking up again toward the end of this year as projected higher crude prices in the second half of 2015 make drilling more profitable,” Sieminski said.
Crude prices have fallen by more than 50% since June last year against a glut on the market and slackened demand triggering huge budget cuts and job redundancies.
