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.
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 In US, Columbus Day Still Generates Controversy

Holiday marks date Columbus discovered Americas, but some are offended by legacy because he enslaved many natives he encountered More

Video Through Sports, Austria Tries to Give Migrants Traction

With 85,000 people expected to claim asylum in Austria this year, its government has made integration through joint physical activities a key objective More

Video Kickboxing Champion Shares Sport With Young Migrants

Pouring into Europe by hundreds of thousands, some migrants, especially youngsters, are finding sports a way to integrate into new host countries More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemeni
Henry Ridgwell
October 12, 2015 4:03 PM
The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video Amnesty Accuses Saudi Coalition of ‘War Crimes’ in Yemen

The human rights group Amnesty International has accused the Saudi-led coalition of war crimes in airstrikes against Houthi rebels in Yemen. Henry Ridgwell reports the group says hundreds of civilians have been killed in strikes on residential areas.

Video No Resolution in Sight to US House Speaker Drama

Uncertainty grips the U.S. Congress, where no consensus replacement has emerged to succeed Republican House Speaker John Boehner after his surprise resignation announcement. Half of Congress is effectively leaderless weeks before America risks defaulting on its national debt and enduring another partial government shutdown.

Video New Art Exhibit Focuses on Hope

Out of struggle and despair often comes hope. That idea is behind a new art exhibit at the American Visionary Art Museum in Baltimore, Maryland. "The Big Hope Show" features 25 artists, some of whom overcame trauma and loss. VOA’s Deborah Block reports.

Video Columbus Day Still Generates Controversy as US Holiday

The second Monday of October is Columbus Day in the United States, honoring explorer Christopher Columbus and his discovery of the Americas. The achievement is a source of pride for many, but for some the holiday is marked by controversy. Adrianna Zhang has more.

Video Anger Simmers as Turks Begin to Bury Blast Victims

The Turkish army carried out new air strikes on Kurdistan Workers Party (PKK) targets on Sunday, a day after the banned group announced a unilateral cease fire. The air raids apparently are in retaliation for the Saturday bombing in Turkey's capital Ankara that killed at least 95 people and wounded more than 200 others. But as Zlatica Hoke reports, there are suspicions that Islamic State is involved.

Video Bombings a Sign of Turkey’s Deep Troubles

Turkey has begun a three-day period of mourning following Saturday’s bomb attacks in the capital, Ankara, that killed nearly 100 people. With contentious parliamentary elections three weeks away, the attacks highlight the challenges Turkey is facing as it struggles with ethnic friction, an ongoing migrant crisis, and growing tensions with Russia. VOA Europe correspondent Luis Ramirez reports.

Video Afghanistan’s Progress Aided by US Academic Center

Recent combat in Afghanistan has shifted world attention back to the central Asian nation’s continuing civil war and economic challenges. But, while there are many vexing problems facing Afghanistan’s government and people, a group of academics in Omaha, Nebraska has kept a strong faith in the nation’s future through programs to improve education. VOA’s Greg Flakus has more from Omaha, Nebraska.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video In 'He Named Me Malala,' Guggenheim Finds Normal in Extraordinary

Davis Guggenheim’s documentary "He Named Me Malala" offers a probing look into the life of 18-year-old Malala Yousafsai, the Pakistani teenager who, in 2012, was shot in the head by the Taliban for standing up for her right to education in her hometown in Pakistan's Swat Valley. Guggenheim shows how, since then, Malala has become a symbol not as a victim of brutal violence, but as an advocate for girls’ education throughout the world. VOA’s Penelope Poulou has more.

Video Paintable Solar Cells May Someday Replace Silicon-Based Panels

Solar panels today are still factory-manufactured, with the use of some highly toxic substances such as cadmium chloride. But a researcher at St. Mary’s College, Maryland, says we are close to being able to create solar panels by painting them on a suitable surface, using nontoxic solutions. VOA’s George Putic reports.

VOA Blogs

World Currencies


Rates may not be current.