Iran Fuels Talk Of Oil Supply Increase

By Stewart Douglas

Oil prices have again fallen by over $1 thanks to suggestions by Iran that they may be on the verge of increasing supply.

The drop in price marks the second consecutive day in which oil prices have fallen, after positive comments towards supply increases from both OPEC and Iran.

The news comes off the back of yesterday’s comments made by an OPEC representative, expressing fears at the economic impact of rising oil prices. 

President al-Hamili, of OPEC, suggested that the oil cartel responsible for production of 40% of the world’s oil supply was concerned at the rising oil prices, fuelling rumors of an imminent increase in production.

The increases in oil prices over recent weeks have led to booming fuel costs, and the potential for further increases could further plunge economies like the US into trade deficit and stint economic growth.

Furthermore with expanding demand in the East, more oil is needed than ever before to maintain a stable price.

OPEC believes that oil prices should settle between $60 and $65 a barrel to promote economic stability - a suggestion that points directly towards an impending increase in supply.

A supply shortage is believed to be at the heart of the record oil prices, a factor which OPEC strongly denies.

Oil prices soared during last week to their highest level in almost a year, just cents off the August 2006 record.

However OPEC has still not officially announced a supply increase, which many experts predict will follow later in the year.

Iran has suggested that it may be prepared to step up production independently to curb the oil supply shortage; news which the market has found reassuring.

In reflection of the potential supply increases, the price of oil fell today by over a dollar on average around the world.