Kuwait City: Share prices in the energy-rich Gulf states nosedived on Sunday following the sharp decline in oil prices and the expected rise in Iranian crude exports after the lifting of sanctions.
The plunge in the first day of trading in the Muslim week also follows heavy losses in global bourses on Friday, when Gulf exchanges were closed for the weekend. The price of oil, which contributes more than 80 per cent to Gulf states’ revenues, shed more than 20 per cent this year to drop below $30 a barrel. This follows a plunge of 65 per cent in the past two years.
The return of Iran to the oil market will only worsen the production glut that has been the main reason for the oil price dive.
According to Amir Hossein Zamaninia, Iran’s deputy oil minister for commerce and international affairs, his country is targeting an immediate increase in shipments of 500,000 barrels a day. It plans to add another half million barrels within months.
“The additional crude will push prices lower when it enters markets that are already oversupplied,” Robin Mills of Dubai-based oil consultant Qamar Energy told Bloomberg.
After the United States and the European Union slapped sanctions against Iran, its oil exports fell to an average of 1.4 million barrels a day in 2014 from 2.6 million barrels daily in 2011.
