By Isaac Cohen*
Oil prices appeared stable at around $65 per barrel, until they started falling slightly, 14 percent since May, which contrasted with the steep fall of 60 percent at the start of this year. This relative calm can be upset by the recent nuclear agreement signed last week with Iran, which will lead to an increase in Iranian oil exports, as soon as trade sanctions are lifted by the end of this year.
According to the International Energy Agency, headquartered in Paris and grouping some of the main consumers of energy, the supply of crude exceeds current demand by 2 million barrels per day. Certainly, this is not very significant as a percentage of almost 95 million barrels per day of world demand.
The US Department of Energy estimated sanctions imposed in 2011 reduced Iranian oil exports by half, from 2.6 to 1.4 million barrels per day. It is estimated Iran can recuperate this level of production in less than a year, besides it can sell between 20 and 40 million barrels of oil it has stored mainly in tankers. Therefore, as soon as possible, Iran will try to regain the market share it lost, particularly in the Far East, due to the sanctions. As described by the foremost oil historian Daniel Yergin, in an op-ed published in The Wall Street Journal, “a battle for market share means lower prices.”
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.