Brent records biggest discount since 2010 as oil plummets below $30

Oil exports have been a delicate issue ever since the global glut experienced, which ultimately led to the imposing of sanctions on Iran. Oil has dropped below its symbolic price of $30 per barrel in places like New York. Prices in New York are going as low as $29.39 per barrel (which was last recorded in November 2003), while Brent is going for a sale of $29.45 per barrel (which is the lowest level it has gone since February 2004). West Texas Intermediate crude witnessed a 5.7 percent decrease, capping at an 11 percent downfall for the week.

The sanctions laid on Iran may soon disappear and could allow oil shipments from the fifth biggest member of the Organization of the Petroleum Exporting Countries, to see a wild boost in their exports, as “prices are down on Iran and concern about China’s economy,” according to the vice chairman of industry consultants HIS Inc., Daniel Yergin.

According to John Kilduff, one of the partners at Again Capital LLC, (a hedge fund company that focuses on energy, based in New York), “the plans by Iran to up exports by a fifth later this month once the sanctions are lifted is the last thing this market needed,” further stating that, “There’s got to be a bottom someplace but we haven’t hit it yet.”

Analysts have warned of the dangers that could lead to further depletion in the price of crude if Iran successfully increases their output once the sanctions are lifted.

Back in 2015, crude experienced an annual loss for the second time due toOPEC abandoning exports during the global glut.

The decline in the price of crude is having a negative impact on producers all over. For example, BHP Billiton Ltd. Is looking to write down $4.9 billion on its U.S. assets, while BP has announced the laying off of 4,000 staff, and Petroleum Brasileiro SA is cutting down its expenditures.

At the ICE Futures Europe exchange based in London, Brent experienced a 6.3 percent ($1.94) drop in their March settlement, as a barrel of oil went for $28.94. For Brent, this was the lowest it had gone in the past 11 months, and the contract ended at the lowest since February 2004. And for the first time since April 2004, Brent dropped below their stable $30 mark on Wednesday. Another setback was witnessed at the European benchmark as it rounded up at a $1.45 discount to March WTI. This is the largest gap experienced since 2010.

Everyone knows that once the sanctions on Iran are removed, the country would try relentlessly to regain all that it has lost in the past. However, according to officials from the country’s petroleum ministry and oil company, Iran has no intention to pressure oil prices by hefting exports.

Oil has been predicted to turn into a new “bull market” according to analysts, and according to Jeff Currie and Damien Courvalin, “The key theme for 2016 will be real fundamental adjustments that can re-balance markets to create the birth of a new bull market, which we still see happening in late 2016.”