Already rocked by excessive volatility, the oil market could become even more volatile in the coming months, according to the chief strategist of JTD Energy Services, with geopolitical disruptions pushing prices higher.
"It's almost like 2011, when (former Libyan dictator Muammar Gaddafi) was toppled. If ... Libya comes into play, that's only going to add more tightness to the market," John Driscoll told CNBC.
The situation in Libya escalated surprisingly quickly last week when the Libyan National Army, a formation affiliated with the eastern Libyan government, launched an attack on the UN-recognized cabinet in Tripoli. The attack followed a statement by LNA leader General Khalifa Haftar that Libya will soon have a single government, sparking hopes of a negotiation between the two rival governments.
Of course, Venezuela and Iran continue to be the usual suspects when it comes to near-term oil price projections with U.S. sanctions targeting the oil industry of both countries as a regime-changing tool.
"Things are terrible there [in Venezuela],” Driscoll said. “Oil output is plummeting, then you've got this wave of electrical outages that have halved their exports."
In fact, the latest shipping data from Reuters and TankerTrackers.com revealed that Venezuela’s March oil exports remained surprisingly stable on February despite the string of blackouts, at a daily rate of around 900,000 bpd.
As for Iran, the analyst said Washington’s aim of bringing down the country’s oil exports to zero was “unrealistic” and “possibly even delusional”, adding that the higher prices rose, the more demand there will be for Iranian oil and it will “find an outlet.”
Brent crude passed the US$70 a barrel mark for the first time in months a few days ago and now, thanks to the new from Libya, it has continued rising. According to Driscoll, this price recovery will not be as short-lived as he himself predicted a month ago thanks to the events in Libya, Iran, and Venezuela.
By Irina Slav for Oilprice.com
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