Oil Direction? Anybody’s Guess
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Despite the many factors that surround the oil market, it seems nobody is able to guess its shortterm direction and price level. Even though the American government has decided to cancel its oil wavier, impose embargo on Iranian oil, and stop Iran from exporting even a drop of its oil, and impose embargo on Venezuelan oil export to the minimum of less than 900,000 barrels per day as well as the continuation of OPEC Plus to stick to its agreement of reducing its oil production by 1.2 million barrels, the oil price still remains at $70 per barrel with no sign of any immediate increase or further decrease.

It seems the oil market is balanced and is not in need of any adjustment as long as USA shale is pouring. Its volume is increasing by the day to reach more than 1.6 million barrels. USA is bound to remain the top oil producer for years to come and reach more than 20 million barrels in the next few years. The current level of oil price and the level of production seems to satisfy the current USA administration so far considering the absence of any “tweets” nowadays. OPEC Plus seems open to any increase in their production and will continue sticking to their agreed reduction volume.

Saudi Aramco does not seem to be able to increase their export and will remain below seven million barrels in the current and coming months. Their domestic demands call for more than 4.5 million barrels of equivalent oil until the end of September. It is not known for how long the oil embargo on Iran will last and if all eight countries will stick to it.

Hence, the current situation is not settling, and will most likely not remain quiet for long especially if the current trade dispute remains unsettled between China and America, which could lead to weakening of the trade activities and less demand on oil. Accordingly, no decision can be taken so quickly but probably the overall oil situation will become clearer in the next few months. Today, the market seems content with its supply, and the demand volumes seems to be balanced without the need for any action to be taken. However, predicting the future oil prices for the rest of the year is still anybody’s guess.

12 May, 2019 0 174
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