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As Production Rises, Iran's Oil Price Drops


The price of Iran’s heavy oil fell around 8.9% in June, compared with the previous month, according to OPEC’s monthly report published on July 12.

The Organization of Petroleum Exporting Countries also says that Iran has slightly increased its daily production to 3,790,000 barrels.

Increase in oil production in the world continued and supplies increased. OPEC says that increase in Libya’s and Nigeria’s production was noticeable, but also U.S. oil production stayed strong.

U.S. has lifted its four decade old restriction on oil exports and reports speak of an oil export boom benefiting states such as Texas.

Last year, OPEC members and Russia, a big non-OPEC producer, agreed to reduce supplies to help boost prices. The Saudi led effort actually did bring down production but continued increase in American shale oil output kept the market well supplied.

Latest reports indicate that Saudi Arabia has slightly increased its production in the last few weeks. Iraq also keeps pumping as much oil as it can, contributing to the relative glut in the world.

OPEC says that overall production by its member countries has increased by 393,000 barrels a day and has surpassed 32 million barrels.

Based on what OPEC and the U.S. Energy Department forecast, oil demand will not significantly increase in the coming months, but OPEC and other producers will produce slightly more oil.

Based on these estimates, forecasters estimate that the benchmark Brent price will hover around $50-51 in the coming months. In that case, Iranian oil will sell much cheaper.

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