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

Video Video Claims to Show Shi'ite Forces in Iraq Executing Sunni Boy

While not yet independently confirmed, brutal killing already has gotten attention of Islamic State followers on social media More

After Six Years, Little Change for Niger Delta's Former Militants

Nigerians who laid down arms in exchange for government amnesty subsidies fear program may end with upcoming presidential elections More

Vietnam Pushes for More Educated Drivers to Curb Road Deaths

Transportation officials hope that making a greater effort to get drivers to learn the rules of the road will reduce fatal crashes More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Video Claims to Show Shia Forces in Iraq Executing Sunni Boyi
X
Jeff Seldin
March 05, 2015 2:36 AM
A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960's Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7th to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960’s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8954
JPY
USD
119.75
GBP
USD
0.6515
CAD
USD
1.2518
INR
USD
61.921

Rates may not be current.