• 18 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 20 hours Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 22 hours Syrian Rebels Relinquish Control Of Major Gas Field
  • 23 hours Schlumberger Warns Of Moderating Investment In North America
  • 1 day Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 1 day Energy Regulators Look To Guard Grid From Cyberattacks
  • 1 day Mexico Says OPEC Has Not Approached It For Deal Extension
  • 1 day New Video Game Targets Oil Infrastructure
  • 1 day Shell Restarts Bonny Light Exports
  • 1 day Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 2 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 3 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
Alt Text

OPEC Favors 9-Month Extension Of Production Cut Agreement

According to Reuters sources, OPEC…

Alt Text

Clashes In Kurdistan Send Oil Prices Higher

Reports of skirmishes between Iraqi…

Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

More Info

Oil Prices Drop, But Probably Not For Long

Oil Prices Drop, But Probably Not For Long

The price for a barrel of oil fell on word that more production was coming from key OPEC members, but a report from the International Energy Agency (IEA) says the drop may not last because Middle East oil producers are facing a shortfall in investments.

A Bloomberg survey of oil companies, producers and analysts show production from members of OPEC rose in May by 75,000 barrels per day (bpd), to 29.98 million. Production levels were boosted by a 70,000 bpd output from Saudi Arabia, its first increase this year.

Even more oil is expected this week from Libya, which has struggled to keep production levels close to the pre-civil war mark.

More oil from key OPEC producers pushed the price of Brent crude, the global benchmark, to around $108.4 per barrel, a relative low point when compared with prices so far this year.

The price of oil can influence everything from corporate earnings to inflation. For consumers, higher oil prices usually means higher gasoline prices, which can deplete cash that would be normally reserved for things like groceries. A lower price per barrel, then, means more money to spend on other things.

A June 3 report from the IEA said a major portion of the estimated $40 trillion in investments needed to keep the lights on through 2035 will need to come from Middle East oil producers. Without those investments, oil prices may increase.

Related Article: Is The Shale Industry About To Experience A Shakeout?

Right now, OPEC production is up against the glut of oil coming from North American shale. Oil supplies from non-OPEC producers are expected to increase by more than 4 million bpd between 2013 and 2018, with much of that coming from North America. That relieves some of the pressure on OPEC, which meets around 40 percent of the world's oil demand.

OPEC Secretary-General Abdalla el-Badri has cautioned, however, that the addition of non-OPEC oil supplies to the global market “should be viewed as a periodic shift."

By the mid-2020s, the North American shale boom cycle will bust and Middle East oil producers will need to pick up the slack, the IEA's report concluded.

The IEA also said a lot of the money needed in the future will be used just to keep current oil production levels static. An estimated $8 trillion will be needed for energy efficiency to make up for the expected decline from maturing oil and gas fields.

The price per barrel of oil tripled during the six-month oil embargo from Arab members of OPEC in the 1970s. The IMF said global inflation rose to 7 percent in part because of the embargo, compared with 4 percent in 1972.

"If investment doesn't pick up as needed, we will have much more volatile oil markets, and in the 2020s we will have higher oil prices," IEA Executive Director Maria van der Hoeven said.

By Daniel J. Graeber of Oilprice.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News