The market has already factored in the possible loss of Iranian oil from the market by November, Russian Oil Minister Alexander Novak said. File Photo by Stephen Shaver/UPI | License Photo
July 27 (UPI) -- Russian Energy Minister Alexander Novak said Friday the market has probably taken into account the potential loss of Iranian oil by November already.
The U.S. departure from the Joint Comprehensive Plan of Action in May means some sanctions are reintroduced on Iran next month. By November, sanctions on the Iranian energy sector snap back into place and U.S. officials have said they'd like to sideline Iran from the market as much as feasible.
The loss of Iran could pull millions of barrels off the market at a time when spare capacity, the amount of oil a producer could put on the market in short order, is at a premium. That concern has at times lent support to the price of oil.
Speaking Friday, Novak said the price for Brent crude oil, at around $74 per barrel, already reflects the risk from U.S. sanctions on the market.
"I think that the market has somehow taken these factors into account and [the market] has become balanced," he was quoted by Russian news agency Tass as saying.
The price for Brent crude oil, the global benchmark, hit its high mark for the year so far on May 22 when it closed at $80.42 per barrel. The run to $80, a multi-year high, was triggered in part by the U.S. decision to leave the multilateral Iranian nuclear agreement.
Igor Sechin, the chief executive officer at Russian oil company Rosneft, said on Sunday his company's budget is based on $63 per barrel, but said he expected oil the price for Brent would be range bound between $75 and $80 per barrel for the year.
Russia is party to an effort steered by the Organization of Petroleum Exporting Countries to balance the market with coordinated controls on production and the largest non-member state contributor. Novak said Russia could add about 175,000 barrels of oil per day in the second half of the year.
On Friday, the Central Bank of Russia said it left its perception on volatility in the price of oil unchanged at a moderate risk level. The bank kept its key annual lending rate stable at 7.25 percent, saying inflation was tracking around its target rate of 4 percent.
"The Bank of Russia forecasts that in 2018 the Russian economy will post a 1.5-2 percent growth rate, which corresponds to its potential amid the remaining structural limitations," its rate justification statement read.