The mysteries of the oil market continue
The oil market is occasionally buoyed by the jolts from political events and natural disasters, causing prices to rise temporarily before they, as expected, fall again. This is the reality faced by investors in the oil market, shareholders of oil companies, and exporting countries. Recent severe storms in the United States have seriously affected oil production in the Gulf of Mexico, removing about 730,000 barrels of daily production from the market for several days, but not more. The political crisis in Libya, instead of moving towards stability and calm, has worsened, and the United Nations is unable to establish even minimal stability in this country. The significant reduction in Libya’s oil production has also caused the total reduction of oil entering the market to reach one and a half million barrels per day. The 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+ countries had little impact. The Saudis also announced that they would increase oil exports to China, which is another reason for the lack of a price boom, while China’s oil demand is already declining. In these circumstances, recent estimates by Morgan Stanley and Goldman Sachs about the decline in oil prices and the creation of a serious surplus in the market next year have been echoed by a new report from Macquarie Institute. Experts from this institute, in their recent 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 regarding the oil market, emphasizing that the surplus of oil in the market next year will be significant. The mysteries of the oil market remain, and the biggest mystery is the simple, perennial 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 acknowledged this reality in its latest report.