World Oil Supply Could be Running on Empty

Rising global oil supply that crude oil countries like Saudi Arabia and Russia drive could come under pressure as key producers face disruptions, the International Energy Agency said Thursday.

 

The agency was happy about its July report about last month’s agreement between the organization of the Petroleum Exporting Countries and Russia to open the taps in order to bring prices down from multi-year highs, according to France 24.

 

It looked at supply disruptions in Libya after a string of attacks on infrastructure and highlighted continuing unrest in Venezuela and a decrease in Iranian exports after President Donald Trump announced he was pulling the United States out of the landmark nuclear deal reached in 2015, according to France 24.

 

“The large number of disruptions reminds us of the pressure on global oil supply,” the IEA said.

 

“This will become an even bigger issue as rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the expense of the world’s spare capacity cushion, which might be stretched to the limit.”

 

The IEA report was published a day after both main oil contracts were sent into freefall by concerns over a stronger dollar and the impact of the global trade war on demand, France 24 reports.

 

The selling was also affected by Libya’s resumption Wednesday of oil exports from its eastern production heartland after a showdown between the war-torn country’s rival authorities, according to France 24.

 

Even though Libyan exports have resumed, the IEA remains worried for the future.

 

“At the time of writing, the situation seemed to be improving, but we cannot know if stability will return,” it said.

 

“The fact that so much production is vulnerable is clearly a cause for concern.”

 

Venezuela continued causing anxieties, which has sent output from the Latin American oil giant crashing in recent weeks.

 

Although Iran hasn’t been hit with the full power of renewed US sanctions, the IEA fears there could be “an even steeper reduction than the 1.2 million barrels per day seen during the previous round of sanctions,” according to France 24.

 

Iraq, which is also chronically restive, does not have spare capacity either, leaving most of the job of hiking OPEC production to Saudi Arabia, the United Arab Emirates and Kuwait, France 24 reports.

 

“We see no sign of higher production from elsewhere that might ease fears of market tightness,” the IEA said.

 

Saudi Arabia and Russia opened their taps ahead of a key Vienna meeting in June where OPEC and Moscow agreed to up output in order to bring prices down.

 

“Already in June the two key producers lifted output by more than 500,000 barrels per day between them,” the IEA said.

 

“Saudi Arabia’s sharp increase allowed it to overtake the US and reclaim its position as the world’s second largest crude producer, and if it carries out its intention to produce at a record rate near 11 million barrels per day this month, it will challenge Russia,” it added

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