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Breaking News:

OPEC Production Falls To Three Decade Low

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Significant Supply Outages Put OPEC In A Very Difficult Position

Mounting uncertainty over oil supply disruptions are clouding OPEC’s outlook on global supply for the rest of this year, a month and a half before the cartel is set to decide whether to extend its production cuts or ramp up output to offset an expected significant drop in Iranian oil exports now that the U.S. has ended all sanction waivers for Iran’s customers.

The expected but yet-to-be-estimated losses of Iranian barrels, as well as an outage of an oil pipeline from Russia to Europe, are giving OPEC a headache in trying to predict how much global oil supply will possibly drop in the second half of 2019, sources in OPEC have told Reuters.

The end of the U.S. sanction waivers for all Iranian all buyers means that Iran’s oil exports will drop as of this month, but no one is really sure by how much. Various analysts expect that Iran will continue to ship oil somewhere between 200,000 bpd and 600,000 bpd, but not all that oil would be oil sales as it could be debt repayment, and some of it is expected to go ‘under the radar’.

To make OPEC’s task even more difficult, Russia halted last month supplies via the Druzhba oil pipeline to several European countries due to a contamination issue, which the Russians say was deliberate.

Russian production has been curtailed because of the restricted exports via the Druzhba pipeline.  

According to one of Reuters’ sources at OPEC, the Russian outage could be “potentially significant”. Related: Iran’s Master Plan To Beat U.S. Sanctions

Citigroup—admitting that it’s difficult to estimate how the Russian outage will impact the global supply-demand—warns that some 400,000 bpd of Russian oil may be off the market for a longer period of time than initially thought.

As if these outages are not enough, Venezuela’s oil production and exports may also continue to drop in coming weeks and months, while Libya’s ongoing fighting could threaten oil facilities and exports at some point.

All these uncertainties in oil supply are making OPEC’s decision making more difficult as the cartel and allies are getting ready to hold a panel of technical committees later this month in Jeddah, Saudi Arabia, to discuss the state of the oil market and the supply and demand balance.

By Tsvetana Paraskova for Oilprice.com

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