Saudi Arabia will likely keep the oil production volume unchanged amid Iranian oil output rise, a US geopolitical intelligence firm Stratfor said on Tuesday in its annual forecast for 2016.
‘The reintroduction of Iranian oil to the market makes Saudi Arabia unlikely to significantly scale back production in the first half of 2016 to defend the price of oil,’ the forecast said, according to Sputniknews.
On July 14, Iran and a group of six international negotiators signed a historic accord to guarantee the peaceful nature of Tehran’s nuclear activities in exchange for sanctions relief. The lifting of sanctions will allow Iranian oil producers to re-enter the market.
‘The implementation of the Iran nuclear deal at the beginning of the year 2016 will add at least 500,000 barrels per day to the oil market followed by a slower production increase over several months,” the forecast said.
Stratfor added that Saudi Arabia could modify its output in the second half of 2016 after assessing the price impact of Iranian oil and evaluating declining commodity production in the United States.
‘However, the Saudi’s will not be able to coordinate a sustainable production cut with other major OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers,’ it said.
Amid global oversupply, world oil prices have continued to plummet, with Brent crude reaching an 11-year low in December. The continued fall of oil prices has been attributed to Saudi Arabia-led OPEC’s unwillingness to cut production out of fear of losing market share, according to media reports.