Oil & Gas Middle East – November 2018

(Jacob Rumans) #1

12


NEWS

NOVEMBER 2018 oilandgasmiddleeast.com

Brent crude prices hit four-


year high, settle below $


It is not easy to tell where oil prices will go with a complex geopolitical
landscape and a market ruled by fear and speculation

A


fter Brent crude hit the $
per barrel mark in early
October, media was flooded
with analyst predictions of $
oil by the end of the year. Since
then, prices have settled at $
per barrel (as of writing).
Barclays forecast that oil could
rise to $90 per barrel close to
November, as US sanctions on
Iran come into effect, followed by
a decline.
When US President Trump
announced in May that sanctions
would be reimposed on Iran,
“the market estimated a cut of
about 300,000 to 700,000 barrels

a day,” Trafigura Group co-head
of oil trading Ben Luckock said.
Now, estimates have shot up to
a supply loss of as many as 2mn
barrels per day.
Meanwhile, US President Don-
ald Trump has been vocal in his
condemnation of OPEC, blaming
the organization for higher crude
prices and demanding they in-
crease output.
Saudi Arabian Energy Minis-
ter Khalid al-Falih said that the
country would raise oil produc-
tion in November from October’s
10.7mn bpd, and Crown Prince
Mohammed bin Salman told

Fear and speculation sur-
rounding US sanctions on Iran
led to a bull run in early October

Bloomberg News reporters that
Saudi Arabia has 1.3mn bpd of
spare capacity.
Reuters reported that al-Falih
said the current oil price surge
“was not based on fiscal flows of
supply and demand. This is cre-
ated in financial markets.”
However, according to the US
Energy Information Administra-
tion’s “Short Term Energy Out-
look” for October, Iranian crude
oil and condensate exports have
fallen by approximately 800,
barrels since peak export levels
in June at 2.7mn bpd.
That was one month after US
President Donald Trump an-
nounced that sanctions would be
reimposed in full by November.
Still, it is unclear if the drop is
only due to looming sanctions.
Also unclear: The extent to
which sanctions will impact
Iranian production, and whether
OPEC and its allies can fill that
supply gap.
“What we are committed in
Saudi Arabia is to make sure
there is no shortage of supply,”
Prince Mohammed said.
“So we work with our allies
in OPEC and also non-OPEC
countries to be sure that we have
a sustainable supply of oil and
there is no shortage and that
there is good demand, that it
will not create problems for the
consumers and their plans and
development,” he added.

UP OR DOWN?
Oil price forecasts
for the end of 2018
range from $60 to
$100 per barrel of
Brent crude oil

QUOTE:


“WE WORK WITH OUR ALLIES IN OPEC AND ALSO NON-OPEC COUNTRIES TO BE SURE THAT WE HAVE A
SUSTAINABLE SUPPLY OF OIL AND THERE IS NO SHORTAGE AND THERE IS GOOD DEMAND...”

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