Plenty of oil supply from OPEC countries diproyeksi would flood the market again andwill likely make oil prices weakened again, according to Nick Cunningham at energyobserver OilPrice.com.
OPEC'S decision on June 5 to not change the production targets for kolektifnya has been widely suspected, so that oil prices do not react much against such news. Butthere are many other reasons why oil prices could be going through a slightweakening in the coming weeks.
First of all, OPEC has been uncovering in the last monthly oil report that their production of at least 1 million barrels per day greater than the target written 30 million barrels per day. Even Saudi Arabia's output rose 25,000 barrels per day in may, underscoring the determination of the most important OPEC member is todesperately defend its market share. Moreover, other OPEC members undertook toraise production.
Iraq reported the success of raising oil production of around 112,000 barrels a day in may, and there is the potential for a bigger production level. The country has beentargeting will increase the lifting of up to 6 million barrels per day per year by 2020.To reach that target, Iraq would need at least 10 billion u.s. dollars in the form of freshfunds, following the improvement of security and infrastructure. While is not yet adequate, Iraq now had enough managed to increase its oilproduction.
Libya also estimated could surprise the market by doubling its output to 800,000barrels per day in late July after the war-torn country that fix a number of pipeline oil refinery and export terminal. Two large export terminal located on the Mediterranean coast, Ice Cider and Ras Lanuf, has ceased operations since militant attacks aredamaging both in December 2014. Pipeline oil refinery in other terminals were alsoclosed due to the protests of many workers. But Libya national oil company intends tooperate the back of these units and increase the potential for production in the nextfew weeks. In the long term, targeting Libya oil production reached 1 million barrels per day by the end of 2015 and 3.1 million barrels per day in 2017.
In addition to these factors, other important variables that should be noted is the return of Iran to the crude oil market. Iran currently has 40 million barrels of oil storedin tankers off the coast, waiting for the completion of the nuclear negotiations in which sanctions the West of the country were expected to be revoked. Deadline for acomprehensive agreement has been set up at the end of this month. If an agreementis reached, then it will not only get rid of one source of geopolitical tensions in the Middle East, but also will allow Iran to sell oil to the world market. It is estimated,about 40 million barrels of oil could be sold by Iran as soon as the sanctions were lifted, and the Petroleum Minister of Iran has said it could catapults our effectiveproduction in one month.
Despite this long Saudi Arabia became the spotlight in the oil market, but it appears that other countries in OPEC is also potentially break the rally in oil prices that took place lately.
Taking into account various factors, Cunningham estimated the world couldexperience excess supply by 1 million barrels per day in the third quarter, even before the Iran oil included in the calculation. However, according to him, this does not meanthat the price of oil was about the sinking, but only that prices rally to more than 60U.s. dollar range might not happen. Different from the case when a deal between the West and Iran to revoke nuclear-related sanctions were successfully achieved. If such an agreement is signed, then really the turmoil could arise and oil prices could come down from the range of movement at this time.
Adapted from the article "Why The Oil Rally May Well Be Over" by Nick Cunninghamat Oilprice.com
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