Oil prices are on the decline once again and this is the much needed news that the world needed. The International Energy Agency said the oil market would be “oversupplied” in 2016 and noted that the prices would fall even further in the coming year. The IEA also mentioned that the demand for oil would slow dramatically next year. More specifically the IEA reports that the global oil-demand will slow down to 1.2 million barrels a day in 2016. Currently the world demand 1.4 million barrels a day.
On Friday, Commerzbank cut its “Brent” price forecast by $10/barrel to $65/barrel by the end of the year. Commerzbank expects Brent to average $73/barrel, down from its prior forecast of $78/barrel in 2016. The bank went on record saying, “the oil market remains in considerable oversupply and there is growing concern that this oversupply will shrink much more slowly than expected.”
On the other hand, negotiations are still being discussed in regards to an Iranian nuclear deal. The deal does however appear to be going south quite fast. Senior Iranian officials are talking about how the U.S. and European powers have backtracked on recent commitments, and thus the deal may not close.
If the talks on the Iranian nuclear deal are stalled, delayed, or canceled, Iran will not be able to get the necessary sanctions for relief and increase oil export output in the next few months. This is very forward for oil prices, as the markets connected to oil have been concerned about a new and fresh supply from Iran could possibly add to global oversupply and push down prices even more.