News / Economy

    Middle East, Sudan Turmoil Cuts Into World Oil Supply

    A general view shows pipelines at the Zueitina oil terminal in Zueitina, about 120 km (75 miles) west of Benghazi, Libya, July 18, 2013.
    A general view shows pipelines at the Zueitina oil terminal in Zueitina, about 120 km (75 miles) west of Benghazi, Libya, July 18, 2013.
    Reuters
    The fall of Middle East tyrannies and renewed conflict there have squeezed the oil supply, returning the region's politics to the fore as an energy worry for the world.

    Oil outages in Iraq, South Sudan, Libya and Iran are combining to help keep oil prices well above $100 a barrel, partly countering the rise in U.S. shale oil supply and concern about the strength of Chinese demand.

    “Geopolitics are firmly back on the radar,” said Soozhana Choi, analyst at Deutsche Bank. “This is occurring against a backdrop of North Sea field maintenance and strong refinery demand for crude oil.”

    Disruptions in the Middle East and North Africa arise as supply from the North Sea is undergoing a heavier-than-usual spell of summer maintenance, and as the flow of Russian Urals crude to Europe has fallen, with more heading to China, further tightening supply at a time of higher seasonal demand for crude.

    Supply losses are more than 700,000 barrels per day (bpd) according to Reuters calculations and industry sources, and could reach 1 million bpd - 1.1 percent of world output - if South Sudan goes ahead with a threatened shutdown of its production.

    “Production is currently underperforming and significantly so,” said David Hufton of oil brokers PVM. “Being an oil bear is a tough existence in the short-term trading world.”

    The supply losses are boosting prices. Benchmark Brent crude futures traded just above $107 a barrel on Tuesday, up from its 2013 low of $96.75 reached in April.

    The first-month Brent contract is trading 85 cents above the second month, up from 51 cents on July 1, showing a rising price of oil for immediate delivery.

    Libya, Iraq production

    Libya's production recovered rapidly after being virtually shut down during the 2011 revolution. It has struggled to maintain output near its normal rate, though, due to worker protests at oilfields and terminals.

    Output is about 1.25 million bpd, down 150,000 bpd from a year ago, according to industry sources. Workers at Libya's largest oil refinery, Ras Lanuf, have gone on strike, said shipping and trading sources on Tuesday.

    Iraq, last year the world's fastest-growing oil exporter, has failed to grow its output so far in 2013. Iraq's Sunni insurgents are targeting its northern pipeline, while technical problems in the south also have weighed on supply.

    Oil exports from Iraq have averaged about 2.25 million bpd so far in July, according to oil shipping figures monitored by Reuters, down 270,000 bpd from shipments of 2.52 million bpd in July 2012.

    OPEC member Iraq's faltering progress has easing pressure on Saudi Arabia and other Gulf members of the Organization of the Petroleum Exporting Countries to make big cuts in output to prop up prices, according to sources in the group.

    A further OPEC producer, Iran, also is struggling. U.S. and European sanctions over its nuclear program are keeping its oil output down to about 2.6 million bpd, well below its potential. Iran produced 2.9 million bpd in July 2012, according to the International Energy Agency.

    Iranian exports, at about 1.1 million bpd, are about half of their level in early 2012.

    And a row between Sudan and South Sudan over allegations of rebel support is threatening to close pipelines carrying South Sudan's oil, taking outages from the four countries toward 1 million bpd.

    South Sudan has started to close some of its production, which most recently was estimated at 180,000 bpd. Sudan last week postponed the shutdown of the pipelines for two weeks, however, to allow more time to end the dispute.

    “It lends underlying support,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt, of the various outages, although concern about South Sudan has eased. “The situation in South Sudan improved somewhat. So it is not yet clear if they will really shut down production.”

    You May Like

    Hope Remains for Rio Olympic Games, Despite Woes

    Facing a host of problems, Rio prepares for holding the games but experts say some risks, like Zika, may not be as grave as initially thought

    IS Use of Social Media to Recruit, Radicalize Still a Top Threat to US

    Despite military gains against IS in Iraq and Syria, their internet propaganda still commands an audience; US officials see 'the most complex challenge that the federal government and industry face'

    ‘Time Is Now’ to Save Africa’s Animals From Poachers, Activist Says

    During Zimbabwe visit, African Wildlife Foundation President Kaddu Sebunya says poaching hurts Africa as slave trade once did

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Ivorian Chocolate Makers Promote Locally-made Chocolatei
    X
    July 29, 2016 4:02 PM
    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Ivorian Chocolate Makers Promote Locally-made Chocolate

    Ivory Coast is the world's top producer of cocoa but hardly any of it is processed into chocolate there. Instead, the cocoa is sent abroad to chocolate makers in Europe and elsewhere. This is a general problem throughout Africa – massive exports of raw materials but few finished goods. As Emilie Iob reports from Abidjan, several Ivorian entrepreneurs are working to change that formula - 100 percent Ivorian chocolate bar at a time.
    Video

    Video Tesla Opens Battery-Producing Gigafactory

    Two years after starting to produce electric cars, U.S. car maker Tesla Motors has opened the first part of its huge battery manufacturing plant, which will eventually cover more than a square kilometer. Situated close to Reno, Nevada, the so-called Gigafactory will eventually produce more lithium-ion batteries than were made worldwide in 2013. VOA's George Putic reports.
    Video

    Video Polio-affected Afghan Student Fulfilling Her Dreams in America

    Afghanistan is one of only two countries in the world where children still get infected by polio. The other is Pakistan. Mahbooba Akhtarzada who is from Afghanistan, was disabled by polio, but has managed to overcome the obstacles caused by this crippling disease. VOA's Zheela Nasari caught up with Akhtarzada and brings us this report narrated by Bronwyn Benito.
    Video

    Video Hillary Clinton Promises to Build a 'Better Tomorrow'

    Democratic presidential candidate Hillary Clinton urged voters Thursday not to give in to the politics of fear. She vowed to unite the country and move it forward if elected in November. Clinton formally accepted the Democratic Party's nomination at its national convention in Philadelphia. VOA national correspondent Jim Malone has more.
    Video

    Video Trump Tones Down Praise for Russia

    Republican presidential candidate Donald Trump is toning down his compliments for Russia and Vladimir Putin as such rhetoric got him in trouble recently. After calling on Russia to find 30.000 missing emails from rival Hillary Clinton, Trump told reporters he doesn't know Putin and never called him a great leader, just one who's better than President Barack Obama. Putin has welcomed Trump's overtures, but, as Zlatica Hoke reports, ordinary Russians say they are not putting much faith in Trump.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8998
    JPY
    USD
    103.32
    GBP
    USD
    0.7594
    CAD
    USD
    1.3176
    INR
    USD
    66.954

    Rates may not be current.