Multiple Factors Leading to Turbulent Times for Oil Industry
Last updated on July 31st, 2020
As the OPEC’s prepare for the big meeting next week and the IEA tries to improve the “very fragile” economy due to weak demand growth, the actual culprit of the turbulences in the oil industry seems to be the US-China trade war. Moreover, the two bills signed by US President Donald Trump on November 27 had a serious impact on the oil prices that fell for two days consecutively.
A report released by analyst of PVM Oil Associates, Tamas Varga stated, “The main price driver, the trade talks, has suffered a blow as President Trump put pen to paper and signed the bill that backs the Hong Kong protesters into law.”
On the other side of the oil industry, burning of the Iranian consulate on November 26 comes with the news of gas price hikes. The Government of National Accord (GNA), the interim government of Libya, had a tough time to one-up Haftar on the Libyan oil patch and lost.
Sources this week reported disruption in the production at the El Feel oilfield, Libya. Also, the Libyan GNA left its audience thinking that it had taken control of a major oilfield from General Khalifa Haftar, Head of the Libyan National Army (LNA), who has been making serious efforts to take over Tripoli.
On November 27, the GNA forces claimed to have successfully taken over El Feel, producing 70,000 bpd, in a military operation. The oilfield staff has shut production till the fighting is over. Also, the LNA of General Haftar launched airstrikes on the perimeter of the oilfield and retook control.
Had the GNA successfully gained control over oil, it would indicate the beginning of the end for Haftar. The control of El Feel is significant as it is next to Sharara, Libya’s largest oilfield. Despite all efforts by GNA, Haftar has overtaken the former’s attempt to overtake the oilfield. Sources claimed that production started on November 28 under the control of Haftar.
On the other hand, US has proved itself to be the net exporter in world oil industry, moving apart from the past years that could affect its ties to foreign allies. Reports from the Energy Information Administration announced that more than 89,000 barrels of crude oil and refined petroleum products have been imported this month as compared to September, seen as the first full month of positive oil trade balance since the 1940s. It was a decade ago that the imports had exceeded exports by 12m barrels a day.
According to a consultancy, Rystad Energy, the increment in natural gas output and renewable electricity generation, the oil shipments have pushed the US to a long-invoked goal of energy independence. As stated by them, the US petroleum trade deficit of $62 b in 2018 – 10 percent of the country’s trade balance, is soon to become a surplus of hundreds of billions of dollars, mainly due to the gargantuan rise of output from the US shale sector.
Further changes in the oil industry can only be affirmed post the OPEC meeting.
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