BAKU, Azerbaijan, Feb.10
By Leman Zeynalova – Trend:
Four geopolitical factors, namely, US-Iran tensions, developments in Venezuela, civil war in Libya and US elections are expected to affect the global oil supply in 2020, Trend reports citing Wood Mackenzie research and consulting company.
“US sanctions have led to dramatic falls in Iranian production and rising tensions across the Middle East, driven by the US policy of ‘maximum pressure’ on Iran. After the US killing of General Soleimani on 3 January 2020, Iran conducted a retaliatory missile strike against an Iraqi base where US forces were stationed. Tensions have since eased, although a further response by Iran or one of its affiliate forces in other countries can't be ruled out during 2020,” said the company.
Our supply forecast for Venezuela is based on Wood Mackenzie’s assumption that President Maduro remains in power through 2022, with US oil sanctions in place during this period.
“We forecast Venezuela’s crude oil production averaging close to 600,000 b/d for 2020. But this remains highly uncertain,” said the company.
“An upside supply risk would be if President Maduro leaves office and the US lifts sanctions during 2020. However, given the extensive damage to fields, the initial impact would be limited. Also, an easing of operational constraints has recently allowed PDVSA to improve uptime and capacity at key Orinoco Belt heavy oil projects, such as the Petropiar and Petromonagas upgraders. The extension of US sanctions waivers for Chevron and other US service companies until 22 April further supports this recovery in Q1 2020.”
To the downside, further curtailment of production is also likely if power outages and blackouts worsen, as was the case in Q2 2019, says the company.
“With increased production also comes the increased risk of further storage backlogs and shut-ins, if Venezuela struggles to find buyers or new restrictions are placed on the export of Venezuelan crude.”
As for Libya, Wood Mackenzie believes that with power-sharing agreements unresolved, fighting and field closures are expected to continue. “We forecast crude oil production flat, at close to 1 million b/d in 2020.”
The US elections are another factor that could affect supply, according to the company.
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