Oil continues to freefall. In 2015 its price fell about 35%. The trend has not changed in the four sessions in this new year 2016: all are counted setbacks. Today, the European benchmark barrel of Brent, is losing over 3% to $ 35 a barrel, a level that has come to lose along the morning. This is its lowest price in the last 12 years. All this scenario of low prices and negative tendencies is due a conflict between Saudi Arabia and Iran to maintain their market share so the level of exports. Iran is going to start trading oil in the international markets soon after the period of blockage is going to finish. Iran was punished by the international community because of the fears of the nuclear programme development in the country. Once all this situation has been resolved it is accepted back in the international trade.
The oil is affected by a host of factors, both supply and demand, which led to crude oil minimum area of the graph. On one hand, the momentum of fracking has multiplied in recent years the number of barrels on the market, leading the United States to the top of the global ranking of countries producing and forcing the once powerful Gulf oil monarchies to lower prices for maintaining its market share. In the last hours a new episode in this particular price war: in full escalation between Iran and Saudi Arabia, the world’s largest oil exporter -even more- just lowered the price offered Europe: 60 cents less per barrel for the countries of northwest Africa and 20 cents less for the Mediterranean area. The State oil company Saudi Aramco, set their prices based on monthly supply, demand and other market-related factors. But this time, his decision is related to the imminent entry of Tehran in the international oil market after the lifting of international sanctions on the Islamic Republic.
From the point of view of demand, it needs to be fixed the levels of consumption around the world, this is the cause of the sluggish growth of most of western economies compared to previous economic recoveries. The instability in the markets after the Monday crash in China leaves also uncertainty in the oil futures market in London. Oil is following the drop in the stock by the increased risk aversion of many investors. On Wednesday, the major European parks have resumed the path of losses after the slight recovery yesterday. Frankfurt and Paris fell over 1.5% three hours after the opening and the Spanish Ibex-35 lost more than one point.
In this environment while waiting for the survey on number of inventories in the US, a fact that investors tend to listen carefully, the oil may not have bottomed out. The latest reports of major global investment banks from Citigroup to UBS, predict that the price will fall to $ 30 a barrel in the coming months. Since oil prices began to fall in September 2014, the price of Brent barrel has lost around 65%. Then it paid about $ 115 a barrel. Today, barely struggle not to lose the line of the 35 dollars.