4 Facts Indicate Oil Supply Won't Be Shrinking Any Time Soon
Ellen Wald, PhD | Oct 18, 2018 20:30
With roiling geopolitical tensions, a looming deadline for Iranian sanctions, and general production concerns, there is no shortage of potential catalysts that can be used to blame the recent escalation in oil market price volatility.
However, as has been said before, much of the recent activity is a direct result of fear and speculation. It turns out, the reality is actually different than the current market narrative. Below, four facts that should quell fears and calm at least some of the wild speculation about any potential supply shortages.
h2 1. US Oil Production Hits New Records/h2The US oil industry is proving more robust than expected. The EIA is now forecast for 2019 US oil production by 300,000 bpd to 11.8 million bpd. These changes are a result of greater than expected increases in production in Texas and North Dakota in July.
Despite the news back in June that a lack of imports from the US to zero from 384,000 bpd in June. Without China’s purchases, the US oil export industry suffered a significant setback that month.
However, American TankerTrackers.com reported that Iran was exporting 2.2 million barrels of oil per day in the first two weeks of October, which is an increase of nearly 200,000 barrels per day from September.
This is not what US policymakers wanted only 2.5 weeks before sanctions go into place. Iran’s customers are supposed to be winding down their purchases of Iranian oil, not increasing them. Officially, the US is still threatening to cut off oil exports to the US or to cut oil production and spike oil prices.
Typically, geopolitical tensions of this type would mean a surging oil market. Other than a brief increase in oil futures on Sunday night, the markets have essentially ignored the Saudi-US situation. Market watchers did not fall for Saudi Arabia’s empty threat, and oil prices actually have declined so far this week on growing inventories.
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