U.S. sanctions on Iran and OPEC’s efforts to stabilize the price of oil could lead to oil prices fluctuating in the $60 to $80 a barrel range in the short term, Sun Xiansheng, Secretary-General of the International Energy Forum (IEF), told Sputnik on the sidelines of the ADIPEC conference in Abu Dhabi on Tuesday.
As oil producing nations are seeking the balance of the market, oil price fluctuations are “reasonable,” said Sun, noting that he expects the range of those fluctuations to be between $60 and $80.
“We have to see how the meeting of the OPEC goes and also the decisions of the United States,” Sun told Sputnik.
The waivers that the U.S. granted to eight countries to continue importing Iran’s oil, at least until May next year, provide “flexibility for both sides,” Sun said.
“These waivers provide enough time to [importers of Iranian oil] to shift the market and choose some other suppliers,” according to Sun.
Even before the United States announced that it was granting waivers, oil prices had started to slide from early October highs and dipped into a bear market last week as the initial fear of diminished Iranian supply was replaced by fears of economic growth and oil demand growth slowing down, while oil supply from the United States soars and Saudi Arabia and Russia were putting additional barrels on the market.
The bear market in oil prompted OPEC and the Russia-led non-OPEC nations of the production cut pact to acknowledge this past weekend that fundamentals point to potential oversupply in 2019. The OPEC-Non-OPEC Joint Ministerial Monitoring Committee (JMMC) tasked the technical committee reviewing oil market balances to come up with possible “options on new 2019 production adjustments, which may require new strategies to balance the market.”
OPEC’s de facto leader Saudi Arabia also weighed in, as always, to ease oversupply concerns and lift oil prices, with Energy Minister Khalid al-Falih saying that the Saudis would cut exports by as much as 500,000 bpd this month and next. The comment sent oil prices higher on Monday. Then later on Monday came another tweet from U.S. President Donald Trump aimed at OPEC—“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!”—sending oil prices sharply down by more than 3.5 percent at 11:22 a.m. EDT on Tuesday, with WTI Crude down to $57.80.