"U.S. shale can not solve the current oil supply problems", it said, arguing that US oil would not be sufficient to offset production losses from Iran, Venezuela and Angola. "With the dollar strengthening, higher oil prices and softening economic growth, we see a threat to demand growth from 2019", BMI Research said on Thursday.
Oil prices are hovering near 3-1/2-year highs, having jumped over 70 percent over the last year, boosted by rising demand and a deal to curb output by the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia and other producers, including Russian Federation. Reuters reports that the American oil major is now trying to seize two cargoes of crude and fuel near a terminal in Aruba run by Citgo, a subsidiary of PDVSA. Current conditions-with geopolitical unrest, unplanned supply outages, thin spare capacity, and rising demand-mirror the state of affairs in 2008 and 2011, when prices rallied into triple-digit territory.
"The recent jump in oil prices will take its toll", said the Paris-based agency, which advises most major economies on energy policy. The inventory surplus has vanished, and more outages could push oil prices up even higher. Reuters is reporting that US crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon.
Venezuela's situation grows increasingly worrying and the expected drop in production from Iran means that prices are expected to reach four-year highs once again.
"Still, the fact is that crude oil prices have risen by almost 75% since June 2017", the agency cautioned.
The agency estimates that global oil inventories fell an average of almost 0.6 million barrels per day (bpd) in each of the past five quarters (January 2017 through March 2018).
It did not rule out price hikes, due to potential production disruptions in Iran and Venezuela. World supply, meanwhile, rose 1.78 million bpd in April from a year earlier, driven predominantly by non-Opec production. Although the group said its crude output inched up in the previous month, investors interpreted the minimal increase as a sign of OPEC's continued commitment to rebalancing the market, especially from its de facto leader Saudi Arabia. Gasoline stockpiles also shrank last week by 3.79 million barrels, the EIA reported.
"Oil markets should become tighter due to a lower output from Iran, coupled with an ongoing contraction in Venezuelan output and OPEC cuts", said Daniela Corsini, commodity market economist at Intesa Sanpaolo in Milan. The high price of Brent is attracting USA exports.