Kuwait, OPEC will work to reduce any shortage of oil supplies: min
‘Supply, demand balance aims at stabilizing oil market’
KUWAIT CITY, May 10: Minister of Oil and Electricity and Water Eng Bakheet Al-Rasheedi said Kuwait and the Organization of Petroleum Exporting Countries (OPEC) and the independents will work to reduce any shortage of oil supplies, saying there is sufficient production capacity to stabilize the world oil markets, reports Al-Rai daily.
Commenting on the effects of the US withdrawal from the Iranian nuclear agreement on the oil market, Al-Rasheedi said the Gulf countries and OPEC have sufficient production capacity to achieve market balance and meet customers’ demands, especially that stability in prices, supply and demand is in the interest of both consumers and producers.
Al-Rashidi explained that the balance between supply and demand is aimed at stabilizing the oil market, ensuring that the main producers have the ability to supply the markets with their needs, and therefore there is no fear of supplies.
Sufficient
He pointed out that OPEC, in cooperation with the group of exporting countries from outside have sufficient capacity to provide any required supplies to the markets and provide customer requests, and thus maintain the stability of the market.
On the other hand, the expert and oil analyst, Mohammed Al-Shatti, said that the effects of US sanctions on Iran will be much lower than in 2012 because of differences among allies, especially as Iran does not export oil or products or condensates or gas to America.
Al-Shatti added that the current efforts lie in the compatibility between the allies to activate the ban to have a result, and this takes six months, which means the results of the embargo shall appear this year or the beginning of 2019, but will support oil prices.
Al-Shatti pointed out that the volume of Iran’s sales before the embargo in 2012 amounted to 2.5 million barrels per day, distributed on the basis of 1.7 million barrels for the Asian markets, 600 thousand barrels per day to Europe, and 200 thousand to Turkey and elsewhere, while sales decreased to 1.4 million barrels per day after the ban.
He said Tehran’s sales rebounded largely after the lifting of the ban in January 2016, raising production to nearly 4 million bpd as sales to Europe and Asia recover. But after America’s announcement of a nuclear deal and new sanctions on Iran, it would have an impact on Iranian oil sales to global markets.
Recovery
Al-Shatti said that the recovery of the fundamentals of the oil market and the increase in the pace of geopolitical factors contributed to pushing oil prices to unprecedented levels for years, and we began to see expectations that crude oil prices could reach $80 per barrel, especially in the second half of 2018.
He noted that when a ban was imposed on Iran’s oil sales between 2012 and 2015, it was part of an international effort contributed to the actual reduction of one million barrels per day.
He said a ban imposed only by Washington would not have the same effect, and could even help steer oil imports from Iran to China and India to cover Venezuela’s crude oil exports.
A former leader in the oil sector affirmed that the impact of the American decision depends on many things, and in the event of military escalation or skirmishes, this will undoubtedly affect prices.
Before the agreement, there were economic sanctions to limit the export of Iran’s oil to some countries, and to limit the import of Iran to some equipment and spare parts that hinder the growth of production, and from here will be the question to what extent will these sanctions?, he pointed out.
“In light of these conditions and the ongoing military and economic escalation, prices could reach $ 90 a barrel,” he said.
In turn, an oil official (who preferred anonymity) said that the real effects will not appear now, but we go back to the previous sanctions, the decline in the exported was between 500 to 600 thousand barrels, and thus the main markets are in Asia, and there are 500,000 barrels per day to China. There are 400,000 barrels per day to India other than Korea and Japan, and there are the Mediterranean in Greece, Turkey, Italy and Spain.
He predicted that there would be US pressure on banks to deal with Iranian exports and currency conversion, as well as restrictions and an increase in insurance for the passage of Iranian ships.
“There is no impact on Kuwait, rise in prices is beneficial, and the coming days will show if there is an agreement to change production quotas between countries to compensate for any drop in supplies, “he said.