Iran Prepares to Sell Oil, Officials Want to Bolster the Price

Oil prices settled below $30 a barrel for the first time in 12 years as traders braced for an influx of crude from Iran at a time when the market already is grappling with a global supply glut.

Iranian officials are hammering out detailed plans for how they will sell the country’s crude once Western sanctions are lifted, which could happen as soon as Saturday. In interviews, officials say they are studying barter deals involving European goods, investment in foreign refineries and switching the benchmark used to price Iran’s petroleum.

The goal of these arrangements would be to claw back market share from other big oil-producing countries, which swooped in on Iran’s old customers when the country was forced to curb exports following the introduction of sanctions over its nuclear program in 2012.

The expectation that Iran will resume oil shipments in the coming weeks or months has been a major driver behind the selloff in oil, which has shed more than 20% this year after tumbling more than 30% in 2015.

On Friday, the U.S. oil-price benchmark closed 5.7%, or $1.78, lower at $29.42 a barrel, the lowest settlement since November 2003 on the New York Mercantile Exchange. Brent crude, the international benchmark, ended 6.3% lower at $28.94 a barrel, the lowest since February 2004.

Some analysts say prices could fall further when Iran ramps up exports, while others argue that current prices already reflect an increase in exports from Iran, the world’s seventh-largest oil producer in 2014. “Ultimately getting beyond the post-sanctions oil-market overhang will be a positive” for prices, analysts at investment bank Tudor, Pickering, Holt & Co. said in a note.

But Iranian officials are aware that they’re returning to the market at an inauspicious time.

They say they want to find ways to sell their oil by locking their customers into special relationships such as oil-for-goods bartering. Such agreements could help Iran during a period of intense competition among oil producers for buyers.

Regional rival Saudi Arabia has abandoned its traditional role of cutting back on its own supplies to calm market turbulence and instead has pumped at or near record levels to claim a bigger share of the market. The Saudis and Russia have homed in on Iran’s old turf in Europe.

http://www.wsj.com/articles/iran-mulls-bartering-oil-other-changes-once-sanctions-are-lifted-1452885571