The price of oil in the global market is highly expected to remain within the range of $70 to 75 per barrel until the end of the year, a Kuwaiti official said on Wednesday.
Geopolitical factors coupled with strikes in key oil producing countries are the reasons for the constant prices, the Kuwaiti Oil Ministry’s Acting Undersecretary Sheikh Talal Al-Sabah told reporters after a seminar hosted by the ministry.
He explained that oil prices remain acceptable for producer and consumer nations alike, given the fact that output has largely declined in oil-rich countries such as Venezuela and Libya. The current prices should serve as an incentive for major oil producing nations to ratchet up energy investments, the official added, pointing out that secure oil supply is needed to keep that sector a float.
Meanwhile,Iran’s oil minister said OPEC may need to hold an extraordinary meeting should the organisation of oil producers fail to prevent member countries from adjusting their crude production without approval, the Shana news agency reported on Wednesday.
After months of underproduction, the Organization of the Petroleum Exporting Countries agreed with Russia and other oil-producing allies to raise output from July by returning to 100 percent compliance with previously decided cuts. That would mean an output increase of roughly 1 million barrels per day.
Minister Bijan Zanganeh sent a “letter of complaint” to his United Arab Emirates counterpart after noticing that some OPEC members were trying to adjust output, the Iranian agency said. Zanganeh told UAE Energy Minister Suhail al-Mazrouei, who holds the OPEC presidency in 2018, that an OPEC/non-OPEC committee that monitors output compliance, known as the JMMC, should not distribute output increases among other producers.
“In case the JMMC does not fulfil its mandate … and has a different understanding from the decision of the (OPEC) conference, the issue should be raised at an extraordinary meeting of the OPEC conference for decisionmaking,” Zanganeh wrote. OPEC sources, however, played down the possibility of an extraordinary meeting. “There is no need,” one OPEC source said. Zanganeh’s comments underline the still-simmering tensions after OPEC’s June meeting.
Saudi Arabia said the deal allowed countries able to produce more to meet the group’s overall conformity level, meaning some members, such as itself, could make up for shortfalls elsewhere. Iran, which faces US sanctions, disagreed and criticised Saudi plans to boost output above targeted levels. The JMMC is chaired by Saudi Arabia and is due to meet next on Sept 23 in Algeria. Iran is not on the committee, which also includes Russia, the UAE, Oman, Kuwait, Algeria and Venezuela.
Last month, Zanganeh told his Saudi counterpart that the OPEC supply pact does not give member countries the right to raise oil production above their targets. In another report, the North Sea physical oil market is letting off a distress signal — crude is once again being stored on ships — as production increases from major exporters threaten a fragile balance between global supply and demand. Reuters data shows nearly 7 million barrels of North Sea crude held on ships that have been static for at least two weeks, unable to find immediate buyers, up from virtually nothing a few weeks ago.
“Over the past two weeks, North Sea floating storage has trended higher, reversing a pattern of decline in place through much of July,” Reid L’Anson, an analyst for energy analytics firm Kpler, said in a note. According to Reuters data, over the last 20 years, August is one of the seasonally strongest months for North Sea crude prices. Yet prices for Forties crude — the largest of the North Sea streams — have fallen to their lowest in a month, after a raft of offers for cargoes held on ships, one of the most expensive storage options.
A slowdown in demand from Asia’s big refiners has dented the Atlantic Basin crude market, just as some of the world’s largest suppliers such as Saudi Arabia, Russia and the United States are bumping up production. But the impact has been most severe in the North Sea. Not only have the likes of Forties and light, sweet grades such as Ekofisk had to deal with a drop in Chinese refinery demand, they have also faced competition on their doorstep from a record influx of US shale oil. Shipments of West African crude to the likes of China, India and Japan reached a 2018 high of 2.44 million barrels per day in July, nearly a quarter more than the same month last year.