Brent crude plunged another 4%, breaking another record and reaching
12 lows on Friday. That is now a drop in excess a 20% within January and
little over 70% over the last 18-months. The average price for a basket
of OPEC crudes on Friday, January 15th stood at $25 per barrel.
The market braces for Iranian oil to reach the market, as sanctions
are being lifted; the decision could be taken today, following a meeting
of the International Atomic Energy Agency (IAEA) in Vienna. Therefore,
markets are likely to open on Monday with good news for Teheran and bad
news for anyone else in the industry. The market is afraid that the
Iranian supply will add to the supply glut, evident since mid-2014.
Teheran is poised to target the Indian market, where OPEC expects most
of the growth in demand will come the following decades.
The effect on the finances of oil producing nations heavily dependent
on oil is yet to be assessed, including Saudi Arabia and Russia.
Russia’s energy minister, Alexander Novak, said production price was in
the $5-$15 per barrel. Saudi Arabia, with low production costs, is known
to be engaged in an effort to regain market share pushing U.S shale,
tar sands and deep water explorations out of the market.
Meanwhile, emerging market currencies linked to commodity-production
are collapsing: Russia’s ruble sank 2%, Australia’s Dollar 1,7%, South
Africa’s Rand 1,3%, Brazil’s Real and Mexico’s Peso just under 1%.
Investors are now turning towards safer assets, pushing up Gold by
0,5% and European government bonds with Germany’s 10-year bonds offering
yields of 0,54%, Britain’s 0,45%, and Italy’s 1,51%. Whilst money is
cheap, deflationary pressure looms in the Eurozone.
http://neurope.eu/article/oil-plunges-below-the-30-mark/