SG:Oil market well supplied and coping with Iran exit
The global oil market is well supplied and can cope with the loss of Iranian crude to Western sanctions, oil officials and executives, including the heads of Total and Royal Dutch Shell.
An increase in global crude supplies and falling crude prices have helped cushion the impact of sanctions targeting Iran's controversial nuclear program.
Mr Christophe de Margerie chief executive of Total said that the market is well supplied. There is no shortage. He was concerned about the loss of Iranian supply on the oil market. Brent crude prices had seen 'a very important decrease.
Brent crude was trading just under USD 99 per barrel after dropping to 16 month low below USD 96 per barrel. Troubles in the euro zone have overshadowed the tensions between the West and Iran, the second largest oil producer in Organization of Oil Exporting Countries after Brent prices hit a record high of USD 128 per barrel in March.
Mr Peter Voser CEO of Royal Dutch Shell said that oil prices will weaken further in the H2 of this year as demand reacts to a slowing global economy while international political tensions were fading. Global demand is softening; we have got recessionary elements in Europe, a small slowdown in Asia Pacific.
Mr Voser said that At the same time, some of the geopolitical elements of price volatility over the past few months have kind of receded and therefore we see a softening of prices which I expect to go well into the second half of this year.
Mr Daniel Yergin IHS CERA chairman and author of the pulitzer winning work said that an increase in global crude supplies and falling prices put the market in a better position. The Prize: The Epic Quest for Oil, Money, & Power. This is a very powerful flotilla of sanctions that are heading towards Iran, it's never been this powerful.
He said that what makes a big difference is that there is alternative oil in the market. There is a very concerted effort to ensure that alternative supply that will come into the market to enable the sanctions to work.
Top oil exporter Saudi Arabia has boosted output to the highest level in decades to cool global oil prices and cover any supply disruption. Increased US supplies have made more oil available to the world's top consumer, cutting its import needs and more supply was also coming from Iraq as international oil companies develop giant fields there and from Libya as the country recovers from civil war.
