The turbulent year for the oil market, with oversupply and subsequent drop in prices, has forced the industry to adjust to a US$60/bbl world. Amidst the glut, the market must now prepare for yet more oil as two Gulf giants, Iran and Iraq, ramp up production in the face of sustained Saudi supply. A new report from Thomson Reuters’ Oil Research & Forecasting team identifies the local and international implications for global supply, as well as the reasons behind this further increase.
According to Thomson Reuters’ research:
- Iran has the potential to produce an additional 500 000 bpd of crude oil from its three main oil fields within six months now that an agreement is in place to remove sanctions. With foreign investment Iran’s crude output could reach presanction levels by 2017.
- Crude oil exports are expected to increase by 300 000 bpd by June 2016, with the initial sales coming from floating storage and then supported by higher production.
- Iran is expected to reclaim its market share in Europe through renewed sales of Iranian Light crude at the expense of West African producers.
- Iraqi exports to the US will drop to multi year lows as flows to Asia, and in particular Europe, surge.
- Higher independent oil sales from the Kurdistan Regional Government threaten to derail Iraq’s production and export ambitions. Continued internal conflict could also circumvent government plans to address nascent fuel shortages through new refinery developments.
- The rise in US Light Tight Oil production has curtailed crude exports from Venezuela, Angola and Nigeria. Asia has mopped up the unwanted barrels but producers remain vulnerable to opportunistic buyers searching for attractive deals.
“We expect no change in OPEC output policy at the cartel’s next meeting in December. The group’s heavy reliance on oil revenues leaves West African and Venezuelan producers in particular, susceptible to a prolonged period of lower oil prices,” said Shakil Begg, Director of Oil Research at Thomson Reuters. “Whatever the next six months hold for the oil market, OPEC’s smaller members must continue in the short term to diversify their economies or they will face further hardships,”
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/05082015/battle-for-market-share-in-opec-countries-1243/