Oil prices fell on Thursday (Jun 25) to levels last seen before the start of the Iran war as expectations of rising supply from the Middle East outweighed demand concerns.
Prompt-month Brent crude futures for August delivery were down US$1.28, or 1.74 per cent, to US$72.46 a barrel by 8.45am GMT (4.45pm, Singapore time), while US West Texas Intermediate lost US$1.15, or 1.63 per cent, to US$69.19 a barrel.Goldman Sachs said it does not expect a large pick-up in Iranian production, even if sanctions relief extends beyond the Aug 21 expiry.
On the demand side, China is likely to remain the main buyer of Iranian crude, as EU and UK sanctions on Iranian oil and vessels remain in place, the bank added.An accord agreed last week to end the US-Israeli war, which began on Feb 28, has allowed the resumption of traffic through the strait.
It set up a 60-day period of negotiations to tackle tougher issues, such as Iran’s nuclear programme. Wright said oil would continue to flow through the strait even if the deal did not hold, and that Iran would not be able to close it again.
Oman opened temporary routes on Wednesday to ease tanker departures from the strait, with the International Maritime Organization and Omani authorities coordinating movements.
Meanwhile, Iraq will have to consider all options if its OPEC quota is not significantly increased, a senior Iraqi oil ministry official told Reuters on Thursday.
The prospect of Iraq considering an exit from OPEC follows the surprise exit of the United Arab Emirates this year. Iraq is one of five founding members, and the group was formed in the Iraqi capital.
Reuters
