Fuji Credit Asset Management analysts have predicted further falls for oil prices even as Iran prepares to re-enter the market with aggressively-priced crude. Years of sanctions have prevented Iran, which has the world’s 4th largest oil reserve, from selling its crude on the global energy markets but the recent deal with the international community over its nuclear ambitions have cleared the way for a lifting of the restrictions on the sale of its oil.

Oil prices are already trading at 12 year lows on fears over slowing global demand and oversupply issues caused by US shale oil producers vying for market share with oil cartel, OPEC.

“OPEC has refused to cut production to support prices,” said Fuji Credit Asset Management’s Newton Greer who heads up commodities research at the Japan-based investment house. “Instead, they are looking to preserve market share and are hoping 2016 will be the year in which low prices finally crush their shale oil competition in the US,” he added.

Fuji Credit Asset Management says the return of Iranian supply is not the only headwind oil prices face. “The lifting of a 40 year-long ban on US crude oil exports will add to the obstacles in the way of a meaningful rally off these price levels. Make no mistake, the immediate outlook for oil prices is gloomy,” added Greer.

The firm does, however, believe that OPEC will ultimately be successful in its bid to drive higher cost shale oil producers out of business. These producers need oil prices at much higher levels in order to be commercially viable while OPEC heavyweights like Saudi Arabia and Kuwait can cope with subdued prices for longer thanks to their relatively low production costs.

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