It remains unclear where the global market will find additional barrels to compensate should political risks in Venezuela and Libya and sanctions on Iran limit those countries’ exports.
Despite trucking and pipeline woes in the US, oil production is expected to increase by 1.7m bpd in 2018 and 1.2m bpd in 2019, according to the International Energy Agency.
THE OIL MARKET IS ENTERING A VERY CRUCIAL PERIOD, WITH POLITICAL RISKS POSSIBLY FURTHER LIMITING PRODUCTION IN VENEZUELA AND LIBYA AND THE FULL EFFECT OF SANCTIONS ON IRAN STILL UNKNOWN.
INFRASTRUCTURE bottlenecks are preventing US oil producers from adjusting volumes to react to higher oil prices, according to the International Energy Agency.
The oil market is entering a very crucial period, with political risks possibly further limiting production in Venezuela and Libya and the full effect of sanctions on Iran still unknown, it said in a report.
It added that it is unclear where additional barrels might be found to compensate.
The US will see exceptional gains of 1.7m bpd in 2018 and 1.2m bpd next year, but companies are holding back due to infrastructure issues, the IEA says.
Pipeline constraints caused the Midland to Cushing benchmark WTI discount to widen to $20 per barrel in 2015, said a report by Wood Mackenzie.
Andrew McConn, a corporate research analyst with Wood Mackenzie, said he sees signs that Permian Basin producers are losing confidence in the ability of key pipeline projects to reach their 2019 target dates. 2020 oil-basis hedge positions have increased by 431% among producers in the second quarter of 2018.