Dynamics of production and export
In addition to the production capacity of the world market determine the anti-Iranian sanctions of the USA and the reduction in supply from Venezuela. In November will come into force restrictions on the import of Iranian oil. For their bypass non-us companies will face a secondary US sanctions. In late may large shipping companies, the Danish Maersk Line and Swiss MSC announced the folding of transportation General-purpose ports of Iran.
This was followed by the decrease of oil supplies from Iran — their average daily volume dropped from 2.58 million barrels in April to 1.76 million barrels in August, data from Thomson Reuters. During the same period, production in Venezuela, according to OPEC, has declined from 1.43 million to 1.24 million barrels per day. The reason for that were problems of the Venezuelan oil industry. They daily production in the country, according to a forecast from Thomson Reuters, fourth quarter will decline to 1.21 million barrels.
On the other scale — the growth of daily oil production in the U.S., c of 10.25 million barrels in February to 10.67 million barrels in June, according to the us energy information Administration. According to OPEC, daily production increased and Saudi Arabia — from 10.02 million barrels in may to 10.40 million barrels in August. This trend will continue in the remaining months of the year: according to the forecast by Thomson Reuters in the fourth quarter, production in the US will increase to 10.91 million bpd, and Saudi Arabia — to 10.44 million barrels.
Will this have any impact on prices largely depends on the unfolding conflict around the Strait of Hormuz. Iranian officials have repeatedly stated that it will block. Technically this scenario is hardly possible: the Strait of Hormuz account for three quarters of exports of OPEC countries (18 million of the 25 million barrels a day, according to Thomson Reuters), and therefore such a measure is disadvantageous not only the US but also countries of the cartel. But the fact of the threats from Iran in the coming months will only fuel prices.
The balance of supply and demand
On their control will play a a growing demand, which, according to the forecast of the International energy Agency (IEA), in the fourth quarter will reach 100.2 million barrels a day (against 98.3 mn barrels per day in the first quarter). This, in the first place, will contribute to high growth rates of the world economy. According to the July IMF forecasts they will amount for the year is 3.9% and they still will not have a serious impact of a trade war. Another constraining factor prices — it is possible to bypass China’s anti-Iranian sanctions of the United States: in the summer the Chinese state traders Sinopec Group, and Zhuhai Zhenrong Corp. during transportation of raw material from Iran is its own tankers began to use ships of the National Iranian oil company (NIOC). If in June under the management of NIOC was only slightly more than half of the ships for transportation of oil to China (11 of 19), in July it was used exclusively by the Iranian tankers.
A similar role can play and the recovery of supplies from Libya, developing the average daily export from 290 000 barrels in July, up to 830 000 barrels in August, data from Thomson Reuters. The same is true in relation to Nigeria. She, like Libya, is not bound by the obligations of the transaction OPEC+ and increased in August the daily export of 260 000 barrels (to 1.99 million barrels against 1.73 million in July).
In August, increased exports, and other countries of the cartel — the United Arab Emirates (430 000 barrels per day), Iraq (220,000 bpd) and the already mentioned Saudi Arabia (170,000 bpd). We can not exclude further increase production from Russia.
In General, the increase in supply by the parties to the transaction while constrained by increasing global demand and rising geopolitical risks. This largely explains why the market has not responded to the last summit of OPEC+ lower prices. Their average level in August was almost the same as in may ($73,1, compared to $76.7 per barrel for Brent, according to the world Bank). Therefore, we cannot exclude that on the weekends the monitoring Committee of the OPEC+ will increase quotas on the production, thereby anticipating the decisions of the December summit of the parties to the transaction.