OPEC Production Problems Push Oil Prices Higher
Friday, February 11th, 2022
Wherever you looked this week, it seemed that Iran was at the center of all oil market news. The prospect of a breakthrough in the nuclear deal, a breakthrough that was assumed to be imminent by several participants, drove oil prices lower over the week after last week’s bull run to mid $90s. The fact that Iran’s crude would take several months to reach markets if a deal were agreed upon shows that this was largely driven by sentiment. On the fundamental front, OPEC+ underperformance is potentially flirting with 1 million b/d in February, news that led even the IEA to get involved in pushing for more oil. The IEA joined the ranks of India and other major importers, all calling upon Middle Eastern exporters to bring more crude into the markets.
IEA Calls Out Saudi Arabia and UAE. The International Energy Agency (IEA) stated that Saudi Arabia and the UAE could use their spare capacity to compensate for the ever-worsening underperformance of OPEC+, with the missing volumes totaling some 800,000 b/d since the start of 2021.
Global Shortage Spreads to Diesel. Global shortages of diesel have become the new talk of the town as inventories in Northwest Europe fell to their lowest level since at least 2008, whilst Singapore gasoil stocks also dropped to multi-year lows of 8.2 million barrels.
Libya Gets Closer to the Brink, Again. The prospects of oil production in Libya were hampered after the eastern-based parliament in Tobruk named Fathi Bashagha the country’s new prime minister, unbeknownst to the other government in Tripoli, ratcheting up risks of further infighting.
