Litasco, responsible for Russian Lukoil’s international trading activities since 2000, “looked set to become the first buyer in Europe since the lifting of sanctions” and plans to deliver one million barrels of Iranian light grade to Lukoil’s Petrotel refinery in Romania, with loading at Iran’s Kharg Island terminal set for February 5, according to Reuters.
Iran’s full return to the market after the lifting of sanctions has contributed to OPEC production jumping to 32.60 million barrels per day, “its highest in years, adding to a global glut of over 1 million bpd in excess of demand, which has pulled down oil prices 70 percent since mid-2014,” says Reuters. Unwilling to participate in any cuts, Iran “has already sold 6 supertankers with additional crude to buyers in Europe and Asia,” according to an Iranian oil source cited by Reuters.
Oil prices began the week with a fall on Monday following weak economic data posted by China and South Korea, with the market taking a hit also from “fading prospects for a coordinated output cut by leading crude exports,” according to Reuters.
With a large supply overhang weighing down the market, Chinese data showing that its manufacturing sector has contracted at “the fastest pace since 2012 in January” added to worries about demand, together with South Korean exports being down to levels not seen since the 2009 financial crisis, says Reuters.
The weak data from Asian markets “would likely remind the market of bearishness again, suggesting more drops for the market in the week ahead,” said Philip Futures analyst Daniel Ang, according to the Wall Street Journal.
The dimming hopes of a coordinated production cut by OPEC and Russia have also further added to the uncertainty on the market since “we do not expect such a cut will occur unless global growth weakens sharply from current levels, which is not our economists’ forecast,” said Goldman Sachs, according to Reuters.
Moreover, the weak data coming from Asian markets will “likely remind the market of bearishness again, suggesting more drops for the market in the week ahead,” according to Daniel Aug, cited by the WSJ.