Tough financial measures imposed by Washington and Brussels have made it ever more difficult to pay for and ship oil from Iran. Its oil output has sunk to the lowest in 20 years, cutting revenue that is vital to fund a sprawling state apparatus.
Already down by more than a quarter, or about 600,000 barrels per day, from rates of 2.2 million bpd last year, shipments of crude oil from Iran are expected to drop further when a European Union oil embargo takes effect on July 1.
Tehran is already estimated to have lost more than $10 billion in oil revenues this year. Causing even more pain, oil prices fell below $100 a barrel last week to a 16-month low amid a darkening outlook for economies in Europe, the United States and China.
Basic mathematics dictate that the lower Iran's oil exports, the higher the oil price it will need to stay in the black. According to the International Monetary Fund, Iran needs oil at $117 a barrel to balance its budget, set at $462 billion. President Mahmoud Ahmadinejad has said the budget was designed to decrease Iran's dependence on oil revenues.
Senior Iranian oil officials have acknowledged that sanctions have reduced exports but say the country has long experience of finding ways around them and a drop in oil revenue is not the end of the world.
The sentiment is fragile even as macroeconomic concerns have driven tight fundamentals into the backseat. Questions are being raised whether crude prices have overshot to the downside; but for importing countries recent price declines have provided a breather.
Chartists see the corrective crude rally faltering. If Brent does not recover above 105 and WTI 90, they recommend sell on rallies as demand weakness is likely to persist. The medium-term outlook is bearish.
For the latest updates on the stock market, PRESS CTR + D or visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
No comments:
Post a Comment