Oil May Drop Below $20 in 2016

Some investors are predicting that oil price may fall to $18 in the New Year based on tensions in the Middle East. Saudi Arabia and Iran have the world’s largest oil reserves, and there is little chance that Iran will cooperate with Saudi Arabia to balance the oil market. There is a potential for Iran to flood the market with over 500,000 barrels of oil per day within weeks of the sanctions being lifted and ultimately 1 million bpd. The market is currently over supplied by 500,000 to 2 million bpd, and the added oil from Iran will greatly increase the oil glut.