Tehran (AsiaNews) – The Iran nuclear deal is negatively affecting oil markets. As Tehran announced that it can raise output 500,000 barrels a day within a week after the end of sanctions and by 1 million a day a month after, crude prices dropped below US$ 50 on Monday for the first time since January.
The slump may have further to go since US refineries typically slow down from August through October for maintenance. At the same time, demand for gasoline typically eases after summer as the seasonal workforce shrinks and families stop vacationing. Weaker economic data in China will also cut demand, thus further depressing oil prices.
“If Iran is able to increase production to the level it estimates, oil prices will see further declines as that will only add to the existing glut,” Hong Sung Ki, a commodity analyst at Samsung Futures Inc.
The Islamic Republic produced an average of 2.85 million barrels a day last month but could boost its output to 3.5 million.
Meanwhile, as the nuclear deal and renewed trade with Iran remain centre stage in the United States, Europe seems determined to mend fences with Tehran.
A high-level Italian delegation led by Foreign Minister Gentiloni is currently in Iran to sign a memorandum of understanding for projects worth at least three billion euros, especially to the oil industry.
Italian Prime Minister Matteo Renzi has invited President Hassan Rouhani to visit Rome "in the coming weeks".
France too has invited the Iranian leader to visit Paris in November whilst it will send a delegation of about 100 business leaders to Iran at the end of September.
Both Paris and Rome once entertained very close relations with Iran before the 1979 Islamic Revolution.