Oil Prices Dive to Lowest Since 2003

Analysts blame fall on Iran's return to market
By Rob Quinn,  Newser Staff
Posted Jan 18, 2016 12:30 AM CST
An oil pump works at sunset on July 16, 2015, in the desert oil fields of Sakhir, Bahrain.   (AP Photo/Hasan Jamali)
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(Newser) – The price of a barrel of oil has dived to its lowest since the days when Facebook didn't exist and most Americans had never heard of Fallujah. The fall to prices not seen since 2003 came after Western nations dropped sanctions against Iran on Saturday, causing analysts to worry about a glut of oil coming to a market that was already experiencing dropping prices, reports Reuters. "Iran has quite a large storage of oil at the moment. They are in a position to sell that if they choose to do so and increase supply quite quickly," a market analyst at CMC Markets tells the BBC, which notes that US shale oil and economic slowdowns in China and Japan have helped send prices downward.

OPEC hasn't acted to support prices, and analysts expect that oversupply will keep the price of oil, which dropped below $29 a barrel on Monday, low for another couple of years, reports the BBC. The AP reports that Iran's return to world markets is already being felt in oil-producing rivals like Saudi Arabia, where the stock market fell 5% on Sunday. But the markets may be overreacting: Reuters notes that analysts believe it will take time for Iran to adjust its infrastructure to export large amounts of oil again, though it does have at least a dozen "Very Large Crude Carriers" filled up and ready to sell oil.

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