Remember last week when oil prices spiked despite a rise in crude production, inventory builds, continuing storage concerns at Cushing, and the admission that there is no March OPEC/NOPEC “freeze” meeting. Well that’s all over as Russia’s Oil Minister Novak confirms Russia’s acceptance of Iranian rights to increase oil output post-sanctions, thus blowing away any ideas of a “freeze” or hopes for a cut in global production. April WTI just broke back to a $36 handle – erasing all of those algo gains…
Strong USD, weak Oil… Rinse. Repeat.
None of this should come as any surprise since, as we detailed recently, on Sunday, we got the latest from Iranian Oil Minister Bijan Zanganeh and the message was unequivocal: “They should leave us alone as long as Iran’s crude oil has not reached 4 million. We will accompany them afterwards.”
As soon as sanctions were lifted, Iran immediately committed to boosting production by 500,000 b/d and said that by the end of the year, it would bring an additional 500,000 b/d of supply online. That would put Iranian production at around 4 million b/d total and, aswe noted back in January, would mean the country will be raking in between $3 and $5 billion every month by the end of 2016.
Which followed (from Tuesday), Kuwait‘s oil minister Anas al-Saleh delivered a rather stark warning to the rest of OPEC when he said the following about the much ballyhooed crude output freeze: “I’ll go full power if there’s no agreement. Every barrel I produce I’ll sell.”
As we noted previously, catching a falling knife is hard, especially when it’s covered in oil. The International Energy Agency today said oil prices may have bottomed out. Several people have tried to call the oil’s floor since prices started falling in the summer of 2014. So far nobody has been right.