An expert predicted a rise in oil prices due to a reduction in production in Libya.

29.08.2024

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The reduction of oil production in Libya will only temporarily boost prices on the global market, according to Sergey Tereshkin, founder and CEO of Open Oil Market. He shared his thoughts with Izvestia on August 29.

"The suspension of production at Libya's largest oil field, Sharara, could remove about 300,000 barrels per day (bpd) from the market, which is about 0.3% of global supply. For comparison, in July 2024, Libya's oil production amounted to 1.14 million bpd," the expert clarified.

He noted that the dynamics of oil production in Libya will affect the overall balance of the oil market. The expert referred to data from the Energy Information Administration (EIA), which showed that global demand for oil, gas condensate, and other liquid hydrocarbons in Q2 2024 exceeded production by 720,000 bpd.

"Due to the shortage on the global market, commercial oil and petroleum product stocks in OECD countries dropped by 28,000 barrels, which is almost 30% equivalent to the daily global demand. This, in turn, slightly boosted price growth: the average price of Brent oil increased from $82 to $85.3 per barrel from May to July 2024," added the CEO of Open Oil Market.

He reminded that in August, oil prices fell below $80 per barrel. On one hand, the markets "adjusted" to OPEC+'s June decisions, where several member countries agreed to reduce quotas further. On the other hand, the market was influenced by news of another surge in electric vehicle sales in China, he explained.

"Finally, as autumn approaches, the forthcoming 'softening' of OPEC+ quotas will come into play. For example, Saudi Arabia's quota will increase by 250,000 bpd by December 2024 compared to the current level, and Russia's quota will rise by almost 120,000 bpd. In this context, the reduction in Libyan production will only briefly boost oil prices. A more significant role for investors will be played by the mentioned easing of OPEC+ quotas, though it will not lead to the risk of a sharp drop in prices. Libya's partial exit from the oil market will smooth investors' reactions to the increased production in the largest countries participating in the deal," Tereshkin concluded.

Translated using ChatGPT

Sourse: https://iz.ru/1750811/2024-08-29/ekspert-sprognoziroval-rost-tcen-na-neft-iz-za-sokrashcheniia-dobyc.

#Oil price forecast #Libya oil production #OPEC+ agreements #Global oil market #2024 oil prices #Energy crisis #Oil market dynamics

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