Despite OPEC oil production cuts and Venezuela and Iran sanctions, the world seems to be oversupplied with crude oil, with the excess amounting to some 90 million barrels above the average 2018 level, according to energy data provider Kayrros.
The company said global oil inventories rose by as much as 40 million barrels in May alone on the back of weaker demand from refiners and end consumers as well as the steady and strong growth in U.S. light crude production. What's more, total OPEC exports are not falling as much as previously expected as Iran continues to ship oil abroad.
Indeed, in late May, TankerTrackers reported the departure of Iran's first oil cargo after the expiry of the U.S. sanction waivers, adding satellite imagery as proof. Kayrros also cited satellite data as proof that Iranian tankers were carrying crude abroad.
Data on the transponders that tankers use to transmit their location also recently revealed that some 33 Iranian Very Large Crude Carriers are traveling with their AIS switched off completely. That's up from 12 detected in April, the data from shipbroker Gibsons, reported by Splash247, showed.
This rapid growth in global inventories coupled with fast-rising U.S. production will likely reinforce OPEC's determination to extend the production cuts that were originally due to end this month. Even though some OPEC members, such as minor producer Equatorial Guinea, say the cartel is comfortable with current price levels, chances are not everyone is equally happy with Brent at US$60.
The next OPEC+ meeting when the course will be set for the next six months was initially scheduled for this month. It was, however, delayed by request from Moscow, which fueled further speculation about the immediate future of oil's fundamentals. The date of the meeting may have finally been set: Reuters reported earlier it will take place on July 1 and 2, citing unnamed sources.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More