BAKU, Azerbaijan, Nov.21
By Leman Zeynalova – Trend:
There are three factors in play that could reduce supply risk in the current market environment, Trend reports citing Deloitte’s 2020 oil, gas and chemical industry outlook.
These factors as the following:
Growing supply from Western Hemisphere producers—the United States and Brazil are both delivering growth in supply barrels from onshore shale plays and deepwater plays, respectively. Together, they added 1.4 million b/d of liquids supply (including crude oil, condensates, and NGLs) in the first nine months of 2019.1 The Canadian oil sands can also deliver more barrels from current projects if required by the market.
Healthy commercial crude oil inventories in OECD countries, standing at 2.9 billion barrels in September 20192—seemingly enough to offset a lengthy supply disruption if needed.
The production restraint agreement between the OPEC and non-OPEC Vienna agreement countries is still in place, preserving spare production capacity—if needed, adjustment to add barrels back to the market in tight supply conditions would very likely be accommodated.
“If we also assume that a lower-demand growth outlook is quite possible in 2020, as a result of potentially weakening global economies, then we could conclude that supply security is reasonably robust, even in the face of security risks in some key producing countries,” said Deloitte.
The historically important issue of global oil supply security returned to the forefront of industry attention in mid-September 2019, when an attack on critical facilities in Saudi Arabia resulted in the largest single supply disruption since the Gulf War of 1991.
And yet, market disruption was largely avoided, with prices rapidly reverting to their recent trading range after a one-day surge. And, even though this event was dramatic, the global market has also seen the slower-moving decline of supply from two other major producers—Iran and Venezuela; the first largely because of economic sanctions, the second mainly due to both sanctions and the ongoing degradation of investment and operating conditions in the Venezuelan oil sector.
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