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Page added on April 12, 2014
IEA points to supply risks outside OPEC
A real prospect that export flows out of Libya can start to ramp up in the coming weeks after the resolution of a nine-month-long standoff with rebels couldn’t come at a better time for OPEC it seems.
According to the International Energy Agency’s latest monthly report, OPEC’s 12 members will need to pump an average of 350,000 b/d more during the second half of 2014 to meet global oil demand after their output slumped to a five-month low in March.
But the OPEC production dip to 29.62 million b/d last month will likely be short-lived and a required uptick should not stress the producer cartel, according to the IEA. After all, OPEC’s spare capacity outside Nigeria, Iran and Libya already stands at over 3.5 million b/d.
What the latest IEA report does do is draw attention to the continued supply risks even outside OPEC, where cost pressures and project delays due to safety and technical hitches are becoming an increasing burden.
This month, the IEA said its higher estimate for the need for OPEC’s oil was as result of lower than expected non-OPEC output, particularly in Russia and Kazakhstan. In the latter country, it pointed to simmering troubles with the giant Kashagan oil field which the setbacks are now feeding though to supply forecasts.
Already years later than expected and way over budget, concerns over a prolonged shutdown at Kashagan are escalating, and the IEA said it now does not expect the field back online until the second quarter of 2015 “at the earliest.”
Where for some time news headlines have been saturated with talk of a potential short-term supply glut due to the US tight oil boom, it seems the IEA’s report gives reason to be more cautious.
Even within OPEC there also remains more room for supply risk. Although Libya’s breakthrough with its eastern rebel may be over — and that is still a big maybe — a significant recovery of Libyan supply is still expected take time. Most or its fields are still shut in or producing at reduced rates and exports from the larger ports remain restricted.
4 Comments on "IEA points to supply risks outside OPEC"
Davy, Hermann, MO on Sat, 12th Apr 2014 12:08 pm
It will be interesting to see what kind of Russian supply pressure we will see from this whole Ukrainian crisis. Russian fields are old and need significant future investment. The Ukrainian crisis is going to complicate that investment process. It has already having a significant effect on the Russian economy. Capital flight is up and the Russian financial markets are down significantly. The Russian economy is forecast to go into recession this year. At the same time Russian military expenditures are way up. Sounds like we could see the usual oil industry gets the hind tit like Venezuela. This would not be good for Global supply and prices. Well we always have Iran and Iraq possibilities!
Kenz300 on Sat, 12th Apr 2014 8:08 pm
Something to be said for self sufficiency……..
Wind and solar can be produced locally……….
Second generation biofuels can be produced locally…..
Less risk…… better energy security and economic security….
DC on Sat, 12th Apr 2014 10:10 pm
Ken….where exactly, on this planet, are so-called ‘2nd-gen bil-fools’ being produced locally? What criteria do you use for ‘local’ anyhow? Do you mean like, making in your own garage? The local 2nd-gen bio-fools co-op? What were and how….
Pops on Sat, 12th Apr 2014 11:43 pm
“Where for some time news headlines have been saturated with talk of a potential short-term supply glut due to the US tight oil boom, it seems the IEA’s report gives reason to be more cautious.”
But . . . but . . .