An unexpected influx of oil supplies from Iran could help further weigh down prices, with expectations for global consumption constrained by slower growth forecasts in China.
Both major benchmarks are down in this evening’s trading, with Brent Crude sliding 1.27 per cent to $75.12 per barrel, while WTI Crude tumbled 2.19 per cent to $70.21 per barrel over the same time period.
This follows China’s fuel oil imports dipping last month after hitting a decade high in April, with its retail and factory sectors also struggling to sustain momentum from earlier this year.
While OPEC+ has committed to 3.7m barrels per day of output cuts, the gloomy economic data from China, alongside long-standing factors such as hawkish rate hikes from the US Federal Reserve has overpowered their attempts to prop up prices.
Iran’s crude production could put even more pressure prices, with the International Energy Agency reporting last week that the country’s output has risen to 2.87m barrels – around three per cent of global supplies.
Flows data provider Kpler has further calculated that Iranian crude exports exceeded 1.5m barrels per day (bpd) over the same month, the highest monthly rate since 2018, despite sanctions.
Exports had risen to around 2.5m bpd in 2018, before the US withdrawal from the nuclear deal during the Trump administration.
Rystad Energy argues that “opaque exports from sanctioned countries” included will “further contribute to supply uncertainty.”
“Surprisingly, while expectations suggested a drop in Iranian crude exports, they have remained stronger than anticipated due to Russia’s reduced reliance on the dark fleet tanker market,” the energy specialist argued.
Craig Erlam senior markets analyst at OANDA told City A.M. that Iranian supplies potentially even mitigate expectations of a deficit later this year when demand is expected to rebound.
He said: “As we can see from the price currently and the limited impact of Saudi cuts recently, the market is currently well supplied. While some of this may be priced in, depending on volumes it could push the price lower. That said, there is an expectation that the market could move into deficit later in the year, but again additional Iranian supply could alleviate that.”