Optimism on Iran talks helps push oil futures down: Emirates NBD

The ongoing nuclear negotiations between Iran and the P5+1 and the expectation of an agreement is helping push oil futures down further, Emirates NBD said in a note.

ICE Brent is now close to moving below $62 per barrel, where it has found support in the past month.

Iran is planning to raise production by as much as 500,000 barrels per day (bpd) once sanctions are lifted.

“This would help to bring it back to pre-sanctions levels, but we are hesitant that Iran could easily raise output quickly by such a large volume.  However, Iran is also estimated to have as much as 40 million barrels of oil held in floating storage that it could readily unleash onto markets in an immediate response to an easing of sanctions,” Edward Bell, commodity analyst at Emirates NBD said.

“While we expect Iranian oil will enter the market substantially only from 2016, we do not anticipate that Iran's fellow OPEC members will accommodate it by cutting their own production,” he added.

Meanwhile, OPEC recorded its highest output since August 2012 in June as the bloc pumped over 32.1 million bpd, according to recent data.  Total production is two million bpd higher than OPEC's recently rolled over production target and is 744,000 bpd higher than a month earlier.

The biggest increase came from Iraq, where production surged by 567,000 bpd to 4.39 million bpd, its highest ever recorded output, according to Bloomberg.

Saudi Arabia raised production by 150,000 bpd to 10.45 million bpd as OPEC's largest producer maintained its policy of increasing output to secure market share.

Production from OPEC's GCC members expanded by just 70,000 bpd as Saudi's increase was offset by an 80,000 bpd decline in Kuwait. Fields in the Neutral Zone, shared between the kingdom and Kuwait, are currently offline.