Global Crude Oil “Glut” Could Last 5 Yrs

Global Crude Oil “Glut” Could Last 5 Yrs

$OIL

Crude Oil markets will continue to be oversupplied for as long as 5 years as producers in the Middle East ramp up output, according to Mohammed Al-Shatti, Kuwait’s representative to the Organization of Petroleum Exporting Countries.

Iraq pumped a record 4.4-M BPD in June, according to data. Libyan output, which has declined by more than 50% due to conflict, can return “at any moment,” Al-Shatti said in an interview Saturday in Doha.

Iran has the capacity to boost Crude Oil exports by 500,000 BPD within 1 week of sanctions being lifted and by 1-M BPD within 6 months, Roknoddin Javadi, managing director of state-run National Iranian Oil Co., said last month.

“Lower prices will continue until the glut in the market ends,” Mr. Al-Shatti said. “Many countries are expected to increase production. Iranian Crude Oil is expected to return and that means an increase in production.”

Demand is not expected to absorb the extra capacity and it will take shifts in supply to affect prices, he said. Geopolitical disruptions or reduced future output because of the 30% fall in CAPEX by major Oil companies could cause temporary  increases in price.

Stay tuned…

HeffX-LTN

Paul Ebeling

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