Oil prices could hit $100 despite increased production from OPEC, allies
Bukola Odufade is Businessamlive Reporter.
You can contact her on bukola.odufade@businessamlive.com with stories and commentary.
The highly volatile oil market might be faced with more volatility in the coming months as oil analysts say that there is a chance crude prices might hit triple digits. Increased production from OPEC and its allies can’t replace production from Iran, which would reduce by 500,000 to one million barrels per day once sanctions are imposed in November.
A key player is Saudi Arabia which promised to increase its crude production to as high as 12 milOther OPEC members like Nigeria, Angola may attempt to squeeze out more oil but most have socio-political limitations and disturbances Oil prices could hit $100 despite increased production from OPEC, allies lion barrels per day but in reality it is limited by technical realities and cost. Its highest production ever was 10.6 million barrels per day. Russia also has spare capacity of up to 200,000- 400,000 barrels per day. Spare capacity by the large crude producers would not be able to offset the supply gap Iran would create, come November.
Other OPEC members like Nigeria, Angola may attempt to squeeze out more oil but most have socio-political limitations and disturbances.
In Nigeria, the Nembe Creek Trunk Line, has been completely repaired and oil fields, Newcross, Eroton and Belema have returned to production.
On the other hand, oil supplies from Libya and Venezuela are falling due to unrest and economic turmoil. In Libya, several oilexporting ports have closed down. Likewise, civil unrest and economic turmoil in Venezuela have taken a toll on the country’s oil supplies. Crude production in the Latin American country has declined by 450,000 barrels per day, and could fall a further 500,000 barrels per day, according to analysts.
Also, shale producers in the U.S. are slowing down drilling because the Permian basin is running out of Stories by Bukola Odufade room in its oil pipelines.
Meanwhile, Iran has threatened to block the flow of oil out of the Persian Gulf by choking off the Strait of Hormuz, a key transport point. That would disrupt the 17 million barrels per day that sail through the region, a significant chunk of the world’s oil supply but very much unlikely to happen.