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The Chief Energy Adviser at Shell, Wim Thomas, on Monday claimed that the glut in oil supplies that have forced down prices for more than two years will not likely clear until the latter half of 2017.
In remarks made to the Reuters news agency, Thomas observed that several factors would push a rebalancing of the oil market later than forecasted by most commodity analysts, including the possibility of uncertainty related to oil output in Iraq and Iran.
The Iraqi government and foreign oil investors earlier this month vowed to restart suspended investment and boost crude production for 2017. Iranian officials, meanwhile, have conditionally agreed to cooperate with a potential production freeze by OPEC members, despite wanting to increase national output.
Thomas further cited the probable return to the market of approximately 1.5 million barrels per day (bpd) of oil from the African states of Libya and Nigeria. Libyan production fell to 320,000 bpd in June, though the unblocking of several key ports will likely help increase exports. The U.S. Energy Information Administration recently estimated Nigerian oil production will stay low into 2017.
"All these things when they come back on the market can again postpone the true balancing," Thomas said in an interview on the sidelines of the ONS oil conference in Stavanger, Norway.
The Shell analysts further noted that oil prices, which have plummeted by more than 70 percent from 2014 highs, could strengthen if OPEC opts to enact a production freeze. Other considerations he said could quickly boost oil prices are stronger demand from China and India, along with the resilience of U.S. shale producers to weak prices.
With regards to Shell, Thomas said the major energy producer is prepared for all outcomes of the future of global oil supplies, and is “very serious” in developing the offshore wind market.
By Erwin Cifuentes for Oilprice.com
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Erwin Cifuentes is a Contributing Editor for Southern Pulse Info where he focuses on politics, economics and security issues in Latin America and the Caribbean.…