Oil prices: so, we fall again
Major oil producers are pulling in their belts as Nigeria and Libya whose supplies have been crushed by a range of domestic conflicts are preparing to add their share of barrels to a global oil glut within weeks. The belts will be pulled even tighter when another large producer – the Kashagan, dubbed as “cash-all-gone” due to series of expensive overruns, is going to pour more oil into the markets. OPEC low-cost producers (Kuwait and the UAE) are not ready to sacrifice their profits. Saudi Arabia and Iraq turned on the taps at their full capacity and raised their production since late 2014. Add to this Baker Hughes’ data announcement about the increase in number of oil rigs and you will get a full package to put oil prices down.
All this happens when refineries are going to freeze their production thereby reducing their appetites for crude oil. Gloomy reports from OPEC, International Energy Agency offer little room for optimism. The 15th International Energy Forum (IEF15) scheduled for the 26-28th of September will unlikely make any difference to this sudden collapse of oil supple, even if two major producers (Saudi Arabia and Russia will manage to negotiate a production freeze.
The oil prices are already responding this competition between major producers. Crude oil prices fell by $4,7 from its September high $47,75 a barrel. We expect oil prices will fall further.