Caspian Energy Journal Caspian European Club
Monday, 15 October 2018 13:00

Iran, Venezuela and US output to drive oil prices, Fitch

Iran, Venezuela and US output to drive oil prices, Fitch

Iranian and Venezuelan oil production levels, along with the pace of US shale growth, will drive oil prices in the medium term. Supply constraints at a time of steadily growing demand are leading the Brent price to spike above USD80/bbl, Caspian Energy News ( reports with reference to Fitch Ratings.

Upcoming US sanctions against Iran already caused the country's output to drop by 350 thousand barrels per day (mbpd) in September. Fitch believes at least 1 million barrels per day (mmbpd) may be at risk unless sanction waivers and exemptions remove pressure to cut production further. Venezuelan output in September was 700 mbpd below its OPEC quota as the economic and political crisis continues to cripple the country's oil industry.

Fitch forecasts that production declines in Iran and Venezuela may reach 2 mmbpd, or more.

US shale growth could help the oil market revert to a more balanced state in 2019 with prices moderating. However, Fitch does not rule out an alternative scenario where oil prices keep rising or stabilise in the USD80-90/bbl range should OPEC and Russia be unable to sustainably offset the production fall.

The pace of US shale growth will be a significant factor in the oil price level. The US Energy Information Administration (EIA) expects US crude production, including natural gas liquids, to grow by around 2 mmbpd in 2018, which should exceed global demand growth. However, infrastructural limitations will continue to limit by how much the US production could grow every year.

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Person in charge of the newsline: Olga Nagiyeva 

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