Oil sank to a 12-year low of less than $28 a barrel
in London on Monday as the removal of international sanctions over the weekend
freed Iran to revive crude exports, threatening to swell a glut created by
fellow OPEC members and U.S. shale drillers.
Saudi Arabia, the biggest oil
exporter, signaled again on Sunday it won’t relent in its strategy to preserve
market share even as prices crash. Global oil markets could “drown in oversupply,”
sending prices even lower as demand growth slows and Iran revives exports with
the end of sanctions, according to the International Energy Agency.
The IEA trimmed 2016 estimates for global oil demand
as China’s economic expansion weakens and raised forecasts for supplies outside
the Organization of Petroleum Exporting Countries. While non-OPEC supply is set
to drop 600,000 barrels a day in 2016, Iran’s comeback could fill that gap by
the middle of the year. As a result, world markets may be left with a surplus
of 1.5 million barrels a day in the first half.
Source: bloomberg
