ZCZC
BCN-41
IEA-ENERGY-OIL
‘Crucial period’ for oil as Iran exports shrink: IEA
PARIS, Sept 13, 2018 (BSS/AFP) – Global oil output hit a record of 100
million barrels per day in August, but the market may tighten and prices rise
as exports from Iran and Venezuela decline, the International Energy Agency
said Thursday.
“We are entering a very crucial period for the oil market,” the IEA said
in its latest monthly report. “Things are tightening up.”
The global record came as output from the Organization of the Petroleum
Exporting Countries rose to a nine-month high of over 32 million barrels per
day (mb/d).
The cartel had agreed in Vienna in June to push up production in order to
put a cap on soaring prices.
In recent months, prices have wavered comfortably between the $70 and $80
per barrel on the Brent crude futures contract.
According to the IEA, a rebound in Libyan production, near-record Iraqi
output and higher supply from Nigeria and OPEC kingpin Saudi Arabia have so
far managed to offset the impact of shrinking production from crisis-hit
Venezuela and Iran.
But with the crisis in Venezuela showing no sign of abating, and with new
US sanctions on Iran’s oil industry set to come into force on November 4,
other producers may have to ramp up production even further if they want to
limit the impact on the market.
“It remains to be seen if other producers decide to increase their
production. The price range for Brent of $70-$80/bbl in place since April
could be tested,” the IEA said.
In May, US President Donald Trump pulled the US out of the 2015 nuclear
deal with Iran and said other countries must stop buying oil from Tehran or
face American sanctions.
And hundreds of thousands of Venezuelans have fled their country since the
nation became engulfed in a political crisis that has sent the economy into
free fall.
“The situation in Venezuela could deteriorate even faster, strife could
return to Libya and the 53 days to 4 November will reveal more decisions
taken by countries and companies with respect to Iranian oil purchases,” the
IEA said.
– Iran sanctions loom –
Output from OPEC member Iran in August hit its lowest level since July
2016, the IEA said, “as more buyers distanced themselves from Tehran ahead of
looming US sanctions”, the report said.
Top buyers China and India have already cut back purchases from Tehran,
and other countries are likely to do the same between now and November.
“While Iranian exports have fallen by nearly 500,000 barrels per day since
May, shipments from Iraq and Saudi Arabia have risen by 200,000 barrels per
day and 60,000 barrels per day respectively,” the IEA added.
In Venezuela too, production dipped in August to 1.24 million barrels a
day, and should it continue to decline, may hit 1 million barrels a day at
the end of 2018.
OPEC, of which Venezuela is a member, had already warned that the
country’s output was at a three-decade low.
“If Venezuelan and Iranian exports do continue to fall, markets could
tighten and oil prices could rise without offsetting production increases
from elsewhere,” the IEA warned.
BSS/AFP/HR/1420