US oil boom 'helps world avoid steep price hike'
London, August 9, 2013
North America's shale boom is insulating the world from steep oil price spikes as several Opec members struggle to maintain production due to unrest and infrastructure problems, the International Energy Agency (IEA) said on Friday.
The agency, consulting developed nations on energy policies, said key among those disruptions were Libya and Iraq where violence has already steeply curtailed output. Upcoming work on key Iraqi terminals could further upset oil buyers in Europe, Asia and the United States.
"Officially, volumes will be curtailed only in September but the fear is the shutin could drag on for months given the scope of the work as well as the country's poor record of delivering projects on time," the IEA said in a monthly report.
"Northern (Iraqi) exports are expected to remain constrained indefinitely given the lack of progress between Baghdad and the Kurdistan Regional Government (KRG) over payment and contract terms," it added.
Pipeline attacks in Iraq's north helped push output below 3 million bpd for the first time in six months, and planned work at southern shipping terminals in September may slash exports by 300,000-500,000 barrels per day (bpd) for months, the IEA said.
That will further cloud plans by Iraq, which signed billions of dollars worth of exploration deals with oil majors, to ramp up output in the next years and ultimately double or even triple production volumes.
Elsewhere among Opec members, in Libya, civil unrest has cut exports to their lowest since the 2011 civil war with shipments standing at only one third of capacity.
Security issues also cloud supply prospects in Opec members Algeria and Nigeria, the IEA added.
"Right now, Opec's main challenge seems to be less future demand softness than practical difficulties in bringing production to market," the IEA said.
Opec leader Saudi Arabia raised oil production in July to a 12month high of 9.8 million bpd, up 150,000 bpd on June, but still not enough to offset the decline in other members.
"Opec July output was down 1.1 million barrels per day on the year for reasons that had very little to do with lack of demand or competition from North American supply, and everything to do with domestic developments in some member countries," the IEA said.
Opec is currently producing 30.41 million bpd, very close to its self-imposed target of 30 million bpd after producing heavily above the target for several years.
CANADIAN OIL RALLY
Benchmark Brent oil futures rose $4 a barrel to a fourmonth high of $107.43 in July on Opec supply outages.
By contrast, non-Opec supplies rose by 570,000 bpd in July to 54.9 million bpd, with North America providing around 40 percent of the growth.
"Canada, rather than the US, was responsible for most of this increase," the IEA said adding that strong growth in North America is expected to lift total non-Opec supply to as much as 55.4 million in the fourth quarter.
That will help meet global oil demand, with demand growth expected to accelerate in 2014 to 1.1 million bpd, compared with 0.9 million bpd in 2013.
The IEA said it slightly trimmed by 100,000 bpd demand growth estimates for 2014 on reduced global GDP projections by the IMF.
Next year, demand will continue declining in Europe, rising in Africa, Asia and the Middle East and edging up in Americas and the former Soviet Union.
Non-OECD oil demand is now forecast to overtake that of the developed OECD nations in the third quarter of 2013, the IEA said. - Reuters