Oil prices could drop on Iran deal

Oil prices could go well under $80 a barrel if a deal is struck to rein in Iran’s nuclear ambitions. “This is the do or die year for Iran,” Eurasia Group president, Ian Bremmer, predicted yesterday.

Oil prices could go well under $80 a barrel if a deal is struck to rein in Iran’s nuclear ambitions.

“This is the do or die year for Iran,” Eurasia Group president, Ian Bremmer, predicted yesterday.

The price of oil, as he pointed out, is already going down as an extra 500,000 barrels a day of Libyan supply are coming back online after the restart of a key oilfield there.

Last week, oil prices dropped 6.3 per cent, its worst week since June 2012. Crude is slightly higher in early yesterday trading.

“Even without an Iranian deal, the Saudis are going to have to reduce production just to maintain a price floor above $80 [a barrel] by the end of first quarter,” Bremmer said.

“If an Iran deal happens, we’re going well under that. The Saudis won’t be able to keep that going,” he added.

Bremmer’s comments follow Eurasia’s report on their top risks facing the world in 2014, risks that are likely to stem from politics rather than the economic environment, which has stabilised since the 2008 financial crisis.

In a report released yesterday, the political risk consultancy ranked America’s troubled alliances, diverging markets, China, Iran and petro-states as the top five in a list of 10 risks facing the world.

“In 2014, big-picture economics are stable if not yet comforting,” Eurasia said in the report. “But geopolitics is very much in play. The realities of a G-Zero order, a world of geopolitical creative destruction without global leadership, are evident.”

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