Oil Prices have plummeted all around the world in the past year as a result of weakened demand for the crude product. Producers all over the Arab world are stricken by declining profits and excess supplies. Despite the greatly reduced prices, oil companies continue to fiercely pump the stuff out of the ground. You would think that the oil producers would sit back and take a break while the prices are low, to preserve their supplies but the opposite appears to be happening. Rather than lose out on their income, oil producers are attempting to make up for the lack in price by selling more of their oil. The market is flooded, and it looks like situations are about to get even worse.
Saudi Oil Producers May Drop Barrel Price To $25 To Hurt Iran
Major producers like Saudi Arabia have vowed to supply even more oil, even if that forces the priced to drop from their current rates of about $50 per barrel all the way down to a projected $25 per barrel or less. This could further reduce the price of gasoline at the pumps, but there are other implications here as well.
Oil producers seem to be well aware that Iran is attempting to leverage their oil supply as a bargaining chip in the recent nuclear talks. Iran has the capability of supplying a significant amount of the world’s oil, and they would like to be able to sell even more of it at the market. Since oil is appealing to the US, Russia, and European countries, Iran believes that their bargaining will afford them some leverage in these talks.
Other countries, most who do not agree with Iran, and who fear their nuclear capabilities, are willing to plunge themselves into some economic turmoil in order to soften the bargaining power of Iran’s oil. By making oil so cheap elsewhere, countries like Saudi Arabia are hoping to take away Iran’s largest bargaining power. This would hopefully prevent Iran from being able to remove the sanctions currently placed on them, and also keeping them from being allowed to reach a nuclear state.
Saudi Oil Producers May Drop Barrel Price To $25 To Hurt Iran.