Crude oil supply woes: unrest in Kazakhstan, Libya and Nigeria cause major conerns

Kazakhstan unrest and oil supply - January 2022


As the US crude oil inventories have been falling consistently since November, new concerns have been growing in the same proportion about the scale of the challenges, when it comes to meeting the mounting demand.

The unrest in Kazakhstan, the former Soviet Republic in Central Asia, the worsening situation in the Libyan oil sector due to the influence of competing militia groups for dominance, Nigeria’s inability to sticking to its OPEC+ quota due to endemic problems at loading facilities have exacerbated the potential disruptions in the supply chain.

The failure of some members of the OPEC+ in contributing the quota agreed upon by the members surfaced in the recent monthly meeting of the block too; in short, although the members, in principle, agreed to increase the daily output by 400,000 barrels, in practice, it had not materialised in the past; nor will it work that way either in the near future, judging by the news that comes from the member nations.

Even Russia faced mounting challenges in boosting its production and making its share of quota available to the crude oil markets.

Some analysts believe that the challenges faced by the producers, to some extent, stem from the lack of investment in the sector by investors, who are worried about future prospects due to relentless march of the renewable sector.

In this context, oil traders have correctly gauged the mood of the crude oil markets, which resulted in a substantial increase in price.

When the crude oil markets were closed on Friday, WTI and Brent stood at $78.90 and $81.75  respectively.

Weekly oil price - January 2022


The talks on reviving the JCPOA, meanwhile, have already lost steam and continue at a lethargic pace, while signatories maintaining an understandable, diplomatic optimism.

With that, the potential contribution to the crude oil markets by Iran remains a distant reality.

That means the misplaced fear of crude oil markets being overwhelmed by the Iranian oil is slowly fading away as far as investors are concerned.

The rise in the price of natural gas, meanwhile, is adding an additional anxiety to the crude oil markets – at a different level. It is usually blamed on the plummeting temperature in the norther hemisphere, which used to enjoy unusually high temperatures, a few days ago.

If the price of crude oil continues to rise at this rate, yet another political intervention is unavoidable in terms of releasing SPRs, Strategic Petroleum Reserves, despite its failure to achieve the intended goal – or the glory. 

Popular Posts

Wil Iran attack Israel soon? Only time will tell!

Image
  Credit: Google Maps With Iran's threat against Israel in a direct strike, the tension in the Middle East went up a few notches on the scale of uncertainty, as the United States made it clear once again that it would not be a passive observer if a conflict erupts. The rising tension came in the wake of the daring attack carried out by Israeli F-35 fighter jets on the building that was adjacent to the Iranian embassy in Damascus, the Syrian capital. Seven Iranian nationals, along with a few Syrians, died in the attack, two of them were from the elite Iranian IRGC - Republican Guards; they were very high ranking officers. In response to the attack, Ayatollahs Ali Khamenei, the Iranian  supreme leader, said that Israel will be punished in kind, during an Eid message on Wednesday; he did not imply in what form the retaliation could come; nor did he say whether it was imminent, leaving the ambiguity open to interpretation by military and political analysts. The supreme leader, however,
Read more

Will Venezuela manage to extend the period of waiver of sanctions?

Image
  Chart:www.oilfutures.co.uk | Data: OPEC As the 53rd JMCC, Joint Ministerial Monitoring Committee, of the OPEC+ is scheduled to take place on April 3, analysts are looking at every possible scenario that could rise in the aftermath of such a meeting. A consensus has already emerged among them that the OPEC+ would stick to its production quota for each member country. That means the official position of the OPEC+ will maintain the current production cuts as long as necessary, without increasing the production to appease the influential customers.  The cartel wants to stick to the production targets, already agreed upon, in 2024 without unnecessarily worries about the potential consequences.  With the OPEC+ sticking to it guns, without increasing the output, the top consumers of oil turned to Venezuela to buy it on the cheap as the former was given a waiver to increase the production and then sell, provided that free and fair elections will be held before the waiver expires. Venezuela i
Read more

The Sun goes on Vacation: total solar eclipse - April 8, 2024

Image
Total Solar Eclipse: April 8, 2024: Vivax Solutions The lucky folks along a relatively narrow geographical band, from Mexico all the way to Canda, are going to witness a rare celestial spectacle on Monday, April 8 – a total solar eclipse. The path of totality – where people can witness total darkness - cuts across fifteen US states, before rolling into Canada in its final mesmerising leg. In mathematical proportion to the excitement, the enviably famous American entrepreneurial spirit has already gone into full swing: the hotel bookings, closer to the path of totality, have gone up exponentially and so have the prices; in addition, traders lost no time in springing into action in promoting related merchandise and of course, safety goggles, while implying that exercising caution before looking heavenward is a virtue, indeed.    The excitement that borders on ecstasy is perfectly understandable: astronomical charts show that there will not be another total eclipse for twenty years th
Read more

Latest Energy News from EIA