Oil in Global Economy Series

June 10, 2016

One of the major factors that have been pushing crude oil prices higher is supply disruption both planned and unplanned. That supply disruption at one point taken away as much as 2.5 million barrels per day, off the market.

Thanks to the push by disruptions and other factors, crude oil is up more than 95% from their February lows. WTI is currently trading at $50.2/barrel and Brent at $1.4/barrel premium.

Let’s look at the supply disruption this year –

First major disruption of the year came from planned maintenance of Murban oil field n February, owned by Abu Dhabi National Oil Company with the production capacity of 250,000 barrels/day.

Next was an unplanned one – sabotage of Kirkuk-Ceyhan oil pipeline. It is Iraq’ largest crude oil export line.

Over political dispute, Iraq halts pumping crude to Turkey, reducing supply by 150,000 barrels/day.

Next major hit to oil supply was a strike in Kuwait, which reduced country’s production by as much as 1.7 million barrel per day. The strike ended in late April.

About the same time, severe wild-fire in Canada reduced production by 1.8 million barrels/day. The fire ended and the country is trying to gain back in production.

Attacks in Nigerian delta, reduced the country’s output to lowest in more than a decade to 1.65 million barrels/day.

Economic turmoil in Venezuela has led regular disruption in production.

In April, Norway’s Ekofisk, the most important oil field in the North Sea went under maintenance.

Columbia’s cano limon pipeline faced rebel attack.

Export blockage in Libya’s Marsa El-Haringa has taken away 200,000 barrels/day away from the market.

Supply disruption has declined from its peak 2.5 million barrels/day in April but still very large at more than a million barrels per day.

Publication source
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