The average price for a basket of crudes from OPEC producers fell to $25 a barrel on Thursday, the group said, even before unrestrained exports from Iran hit the market.
Benchmark global oil prices took a fresh hit on Friday with the market bracing for more supplies from Iran earlier than expected.
The Organization of the Petroleum Exporting Countries said the price of a basket of crudes produced by its 13 members was assessed at $25.69 on Wednesday.
Iran expects the United Nations nuclear watchdog to confirm on Friday it has curtailed its nuclear programme, paving the way for the unfreezing of billions of dollars of assets and an end to bans that have crippled its oil exports.
For the past 18 months, oversupply has been the main factor responsible for dragging down prices by two-thirds, after Saudi Arabia led OPEC in a shift of its policy by deciding against cutting production to support prices.
Low prices have also spurred global demand to multi-year highs, but just as Saudi Arabia’s strategy was showing signs of success, the United States has lifted a decades-old ban on its oil exports and Iran is bracing to boost output after lifting of the sanctions, adding to bearish sentiment in oil market.
Gulf oil sources have been sceptical about a quick return of Iranian barrels and Tehran’s ability to raise production as swiftly as it says it can. They have expected sanctions to be lifted by the end of March with around 200,000-300,000 barrels per day of extra production flowing from Iran later this year.
Some now see oil prices falling further to around $25 a barrel. Brent was trading at $29.53 on Friday at 10.23GMT.
OPEC’s Reference Basket of Crudes (ORB) is made up of: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy, Basra Light (Iraq), Kuwait Export , Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine, Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
Saudi Arabian oil minister Ali al-Naimi has said that growing global demand could absorb an expected jump in Iranian production this year.
Tehran plans to lift production by 500,000 barrels per day (bpd) post-sanctions and gradually raise shipments by the same amount a few months later.
Tehran is expected to target India, Asia’s fastest-growing major oil market, as well as its old partners in Europe with the increased exports.
China’s state-run oil refiner Sinopec Corp has purchased its first ever batch of U.S. crude oil for export, a source told Reuters on Thursday, a landmark transaction after the ending of a four-decade ban on domestic exports.