Tightness in the Oil Market Will Win Out: Energy Aspects' Sen

Jeannie Matthews
April 15, 2019

Brent crude oil futures rose 72 cents, or 1.02 percent, to settle at $71.55 a barrel.

Output declines in OPEC because of the supply pact, plus the sanctions on Venezuela and Iran, have exceeded expectations.

Oil markets have been lifted by more than 30 percent this year by supply cuts led by the Organization of the Petroleum Exporting Countries and US sanctions on oil exporters Iran and Venezuela, plus escalating conflict in OPEC member Libya. If this happened, any increase would be smaller than 1.2 million bpd, the source said.

The report also said that Angola was one of China's three largest oil suppliers, together with Saudi Arabia and Russian Federation, with shares of 11.3%, 15.2% and 14.6% in February, respectively.

"Russia has started talks about an oil production rise as it can hardly follow the OPEC+ deal", said another Russian energy source.

In a closely watched oil market report published Thursday, the IEA reaffirmed its estimates for global oil demand growth in 2018 and 2019 at 1.3 million b/d and 1.4 million b/d, respectively.

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According to the report, only time will tell if the EIA current demand forecast (1.4 mb/d) proves accurate, but the "risks are now to the downside".

Russian Federation is also ready to boost supplies.

The U.S.' sanctions on Iran and Venezuela caused a decline in oil production and exports of these countries.

The International Energy Agency said on Thursday that Venezuelan crude production has dropped below 1 million bpd to 870,000 bpd due to US sanctions, and Iranian supply could fall further after May if Washington tightens its sanctions against Tehran, as many experts anticipate.

OPEC, along with Russian Federation and other non-member countries, is trying to keep 1.2 million barrels per day (b/d) off the market through June, following a collapse in crude prices at the end of 2018.

The kingdom has decreased production by 1.30 million bpd since November when it pumped a record high of 11.09 million bpd. Though the rig count itself is a lagging indicator, with additional production showing up with a five-to-six-week latency after new drilling is reported, it is an important gauge to market participants trying to determine if USA output is surging again.

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