Baku, Azerbaijan, July 25
By Leman Zeynalova – Trend:
There is enough supply to meet projected oil demand growth for both 2018 and 2019, Ann-Louise Hittle, vice president, Macro Oils, at global natural resources consultancy Wood Mackenzie told Trend.
“If further supply outages are avoided elsewhere globally, the expected decline in Venezuela's production over 2018 and 2019 and decline in Iran's oil exports can be absorbed without a dramatic rise in oil prices,” she said.
The analyst pointed out that Saudi Arabia and Russia along with other Gulf Arab producers are increasing their production to offset the lower oil output from Venezuela and Iran.
“In our base case forecast, these steps along with our view of strong US crude oil production growth this year, means there is enough supply to meet projected oil demand growth for both 2018 and 2019. On this basis, Brent is forecast to average $73 per barrel for both years,” said Ann-Louise Hittle.
Iran’s oil output is expected to decline by 1 million barrels per day after the imposition of the fresh US sanctions on the country.
US President Donald Trump withdrew from the Iran nuclear deal in May, and Washington now plans to re-impose sanctions on Tehran next month. The first round of US sanctions on Iran goes into effect in August, followed by ones targeting Iran's oil exports in November.
As for Venezuela, OPEC noted in its monthly report that crude production in Venezuela dropped by 47,500 barrels per day between May and June to average 1.340 million bpd – a drastic fall in comparison to the average of 2.154 million bpd in 2016 and 1.911 million bpd in 2017.
Industry experts have said that oil production in Venezuela could plummet to 1 million barrels per day (bpd) as early as this year.
Although Venezuela has claimed it is revising its plans for production to make this year one of “consolidation and stabilization”, the industry in a broader sense struggles to believe the country will be able to reverse its steep production decline that has plagued the country’s economy for several months.
---
Follow the author on Twitter:@Lyaman_Zeyn