The puzzles of the oil market continue
The oil market is content with occasional shocks from political events and natural disasters to see prices rise a little and then, as expected, fall again. This is the reality that investors in the oil market, shareholders of oil companies, and exporting countries face. Recent severe storms in the United States have seriously impacted oil production in the Gulf of Mexico, taking about 730,000 barrels of daily production off the market for several days, but no more. The political crisis in Libya, instead of moving towards stability and calm, has worsened, and the United Nations is also unable to establish even minimal stability in this country. The serious reduction in Libyan oil production has also led to a total reduction of oil entering the market by one and a half million barrels per day. A temporary increase in oil prices was the result of these developments, and interestingly, the news of the continuation of the production cut ceiling by eight OPEC Plus countries had little impact. The Saudis also announced that they would increase oil exports to China, which is another factor preventing price growth, while China’s oil demand is already declining. In this context, Morgan Stanley and Goldman Sachs’ new estimates about the decline in oil prices and the creation of a significant surplus in the market next year have been echoed by a new report from the Macquarie Institute. Experts from this institute, in their new estimates, have pointed to a significant increase in production by non-OPEC countries and a decrease in demand, especially in China, which are the same points confirmed by experts from other credit and banking institutions about the oil market, and they have emphasized that the existing oil surplus in the market will be significant next year. The puzzles of the oil market remain, and the biggest puzzle is the simple, always-present question: To what extent does this market rely on political and military crises and natural disasters for its prosperity, especially when, apart from the International Energy Agency’s emphasis on the declining trend of oil demand, OPEC has also accepted this reality in its new report.