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

Hong Kong Democracy Calls Spread to Macau

Macau and Hong Kong are China’s two 'special administrative regions' which gives them a measure of autonomy More

After Nearly 2 Years, Pistorius Remains Elusive

Reporter Anita Powell reflects on her experience covering the Olympic athlete's murder trial More

Kenyan Coastal Town Struggles With Deadly June Attacks

Three months after al-Shabab militants allegedly attacked their town, some Mpeketoni residents are still bitter, question who was really behind the assaults More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Obama to Ramp Up Anti-Ebola Efforts in Africai
X
Luis Ramirez
September 15, 2014 11:01 PM
President Barack Obama on Tuesday will unveil his plan to ramp up efforts against the spread of the Ebola virus in Africa. VOA White House Correspondent Luis Ramirez reports.
Video

Video Obama to Ramp Up Anti-Ebola Efforts in Africa

President Barack Obama on Tuesday will unveil his plan to ramp up efforts against the spread of the Ebola virus in Africa. VOA White House Correspondent Luis Ramirez reports.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7735
JPY
USD
107.03
GBP
USD
0.6155
CAD
USD
1.1011
INR
USD
60.954

Rates may not be current.