It’s good news, especially for any large oil consumer. The oil price has gone down to the lowest since the year 2003. The big reduction has been led by the lifting of the sanctions that were imposed on Iran, which blocked it from exporting oil to many countries. Since it was released from the sanctions, many consumers are having it easing purchasing oil.
The lifting of the sanctions was done on Saturday by the United States, hence Iran being free to export oil. Being one of the large exporters of oil, many countries are receiving more oil, hence reducing the price. Internationally, the price has reduced to $27.67 a barrel, which hasn’t happened since 2003. Looking at country by country, there are those whose prices didn’t reach the 2003 line but still, it almost reached. For example the U.S. crude reduced by 64 cents, coming down to $28.78 a barrel while in 2003 it was at $28.36.
The low price could stay for longer before rising since large producers are delivering so many barrels in a day. “Major producers are currently delivering 2-2.5 million barrels per day more than demand, so the question is how long they can continue to overproduce for at that level,” said Stuart Gulliver, CEO of HSBC. With a higher supply which has surpassed the demand, the oil business companies might be experiencing a drop in their profits, as every consumer celebrates the reduced price.