In this interview given to Cyba Audi from Asharq Business Bloomberg, Dr Carole Nakhle, CEO of Crystol Energy, commented on the return of Iranian oil to the international markets, the outlook for the global demand and oil demand.
Dr Nakhle stated that oil markets have factored in the return of Iranian oil, at some point. The question is: when? Of course, any increase in supply can cause a downward pressure on prices. However, this has to be weighed against the growth in oil demand – which at the moment seems to be fast enough to accommodate Iranian oil, as well as other supplies. An additional important point is that if sanctions are lifted, Iran’s oil sales will be more transparent thereby supporting OPEC+ strategy.
Dr Nakhle said that OPEC’s discipline during the Covid-19 crisis has helped prices return to the pre-pandemic levels in a period of less than a year. For comparison, it typically takes at least 36 months for prices to return to pre-collapse levels in previous major crises.
Other factors leading to OPEC’s current success include the rapid recovery in oil demand by major consumers such as the US and China, driven by their strong economic growth. Meanwhile, US shale is yet to react significantly to the rise in prices.
Concluding, Dr Nakhle warned that the economic outlook is still fragile as the pandemic is not over yet. On the bright side, OPEC holds a record spare production capacity of more than 5 million barrels per day which would help to soften the impact of rapidly rising prices.
Watch Dr Nakhle's key remarks (in Arabic):
“Oil Intensity: The curious relationship between oil and GDP“, Christof Rühl and Tit Erker, May 2021
“Global Economy and Energy Markets Weekly Commentary – 20th Jun ‘21“, Christof Rühl, Jun 2021