Oil in Global Economy Series: Key oil market updates

Monday, November 19, 2018 3:00 PM UTC

While the oil market continues to focus on supply/demand fundamentals, these are some key updates that you need to keep a tab on,

U.S. oil rig count: The United States is continuing to see a surge in production. According to the latest report, the production is at a record high of 11.7 million barrels per day. Despite fewer rigs operating compared to 2014/15, the production efficiency has pushed the overall production higher. As of the latest report, the numbers of operating rose to 888, the highest since March 2015. The numbers of operating rigs have increased more than 185 percent since bottoming in May 2016.
Venezuela crisis: Crisis continues in Venezuela. According to the latest report, inflation has reached an all-time peak of one million percent. And oil production has continued to dwindle. According to the latest OPEC survey, the production has declined to just 1.17 million barrels per day.
Libya: Libya's oil production continues to recover rapidly. The recent violence has somewhat subsided but reports suggest that both sides have started implementing the security arrangements. Libya is likely to hold the general election on 10th December 2018. Germany has agreed to provide €2 million in assistance. As expected the production reached 1.05 million barrels per day in September. Libya’s production is recovering fast. According to OPEC’s survey, the production was well above a million barrels per day.
Iran: Uncertainty surrounds Iran’s oil exports as the U.S. sanctions have kicked in from 6th November. The United States has promised harshest of punishments to those who violate the sanctions including payment system SWIFT. However, the U.S. has allowed a 180-day waiver for 8 counties, including China, India, and Korea. OPEC surveys suggest that Iran’s oil production is coming down. There are reports that Japan would soon stop buying its crude oil from Iran.
OPEC & Russia & Saudi Arabia: As oil price decline, OPEC producers are suggesting a production cut of million barrels per day. Russia has reportedly rejected the idea of joining another round of production cuts and expects the oversupply to be a temporary phenomenon. In October, OPEC production rose by 127,000 barrels to 32.9 million barrels per day.
Saudi Arabia and Trump: President Trump reportedly pressing Saudi Arabia to increase production to keep oil price low as it helps not only his economic agenda but makes it difficult for Iran as oil exports bring a lesser amount of revenues.
Nigeria: Nigeria’s oil industry is struggling with regular oil theft. In October, production declined by 70,000 barrels per day just due to theft and attack on oil infrastructure.