Norway’s oil industry, already struggling after crude prices collapsed last year, is being dealt another blow as an Iranian nuclear deal promises to boost global supply.
“For Norway’s offshore production, it’s not that positive,” Thina Saltvedt, an oil analyst at Oslo-based Nordea Markets, said by phone on Tuesday. “Companies on the Norwegian shelf will face tougher competition because costs must be reduced even further to be competitive internationally.”
Norway’s krone declined, tracking a drop in global crude prices after Iran was said to reach a deal with world powers over its nuclear program.
The currency fell as much as 0.6 percent and traded 0.4 percent lower at 8.9349 per euro as of 9:19 a.m. in Oslo.
“It’s a short-term effect linked to the oil price, but also a long-term effect because this changes the fundamental income conditions for Norway,” Thina Saltvedt, an oil analyst at Oslo-based Nordea Markets, said by phone. “For Norway’s offshore production, it’s not that positive. We’re getting a new challenge with a new, cheap competitor in the market.”
Iran, once OPEC’s second-biggest producer, reached an agreement that will curb its nuclear program in return for an easing of sanctions, according to an official in Vienna. The accord raised speculation of increased crude shipments into a market that is already oversupplied.
