Impact of Iran deal on oil remains uncertain – finance minister

Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf (Reuters / Raheb Homavandi CJF / KS)
The impact of Iranian oil expected to come onto the world markets after it signs the agreement on its nuclear program is still difficult to forecast, as there are too many other global factors, said Russian Finance Minister Anton Siluanov.

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Injecting new oil into world markets certainly could impact prices, said Siluanov. But the price depends on the global economy at large. Such macroeconomic factors like big crude consumers’ feelings also have their impact on the price, he added.

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“The oil price undoubtedly forms due to market demand and supply and today we see that the instability of financial markets in China has already influenced the price,” he said.

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“If there is enough demand, the impact will be minimal,” he added.

A further fall in oil prices would result in a recession in US shale; it wouldn’t be cost-effective to invest in shale, that’s how the market self-regulates, according to Siluanov.

“We’ll be analyzing the situation, Russia has enough reserves and won’t suffer much from an oil price decline while it has already had such an experience two years ago,” Siluanov said, adding he doesn’t think such a situation could happen again.

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Oil prices almost halved in the last six months of 2014, with Brent crude diving below $45 for the first time since 2009. However, crude prices have rallied strongly to around $60 per barrel since the beginning of 2015.

On Thursday Brent futures for July were up $1.76, trading at $58.81 a barrel at 19:10 MSK. West Texas Intermediate (WTI) was up $1.25, at $52.90 a barrel.