(Guardian) Global oil prices will remain under pressure this week after Iran said it was ready to add half a million barrels a day to crude exports just hours after international sanctions were lifted this weekend.
Iran’s president, Hassan Rouhani, hailed a “glorious victory” as his country relished reconnecting to the global economy following the formal announcement late on Saturday that sanctions were ending thanks to moves by Tehran to scale back its nuclear programme.
Iran returns to international oil markets with prices hovering near 12-year lows because of a supply glut and waning global demand as economic growth falters. The prospect of Iran flooding the market with more crude had already dented prices last week, pushing Brent crude below $30 a barrel .
Echoing Friday’s sell-off on commodity and global stock markets , shares in the Middle East tumbled on Sunday. Saudi Arabia’s Tadawul index was down more than 6% as the latest drop in crude prices intensified worries over the economic outlook for the major oil producer. In Egypt, shares extended last week’s losses on broader worries over emerging markets and the EGX 30 index was down 3%.
The lifting of sanctions includes an end to an EU embargo on imports of Iranian oil and on Sunday the country confirmed it was geared up to raise exports.
“With consideration to global market conditions and the surplus that exists, Iran is ready to raise its crude oil exports by 500,000 barrels a day,” the deputy oil minister, Amir Hossein Zamaninia, was quoted as saying by the Shana news agency.
But Rouhani also suggested the new era could reduce Iran’s dependence on oil . He described the deal as a “turning point” and an opportunity for Iran’s economy to cut its “umbilical cord” to oil while prices were low.
Oil prices have almost halved in the last six months amid worries about oversupply and softening demand on the back of a weaker global economic outlook and a downturn in China, the world’s biggest energy user.
Analysts noted that the return of Iran to oil markets could have relatively little impact on prices over coming days given it was largely anticipated.