Brent’s price shows no signs of softening
12 Jul 2018 - by
Indications are that the price of Brent crude, currently hovering around $72 (R963) a barrel, will not decrease anytime soon and that ongoing geopolitical tension could even push it to $80.
Earlier today economic analysis from Barclays in London had the bank dashing hopes that relief is in sight, predicting that a price of no lower than $73 could be expected for the remainder of the year.
Momentum economist Sanisha Packirisamy was slightly more hopeful, forecasting a marginal increase of $72.02 that could possibly head towards $75 in 2019.
And Lukman Otunuga, a research analyst working for forex brokers FXTM, said that unrest and uncertainty in various locations were contributing to fears that supply would remain under threat in certain countries.
Chief among these is strained production in Canada, Venezuela, and the portents of US oil sanctions on Iran.
However, ongoing jitters along the Gulf of Sirte in Northern Africa is playing the biggest role in Brent’s price which is showing no signs of relenting to global hopes for relief.
Recently the Organisation of Petroleum Exporting Countries (Opec) said that global under-supply would be corrected with the guaranteed production of a million barrels a day.
News from Libya fed into Opec’s hopes that relief was in sight when that country’s National Oil Corporation (NOC) announced it had re-established control over the oil refinery and port of Ras Lanuf, including the neighbouring ports of Es Sider, Hariga, and Zuwetina – all situated on the Gulf of Sirte.
About two weeks ago, Reuters reported from Benghazi on the Libyan coast that a tanker docked at Hariga had been unable to load because it didn’t obtain permission from Islamic State factions that had assumed quasi control in the area.
As the military impasse dragged on into early July, oil production in Libya remained under threat, undermining supply from the Sarir and Messla oil fields.
But an official statement released yesterday said that, after the factions had been pushed back by troops from the General National Congress, NOC members “oversaw preparations for the resumption of production, maintenance and exports operations at oil fields and ports recently closed during the Gulf of Sirte and Hariga crisis”.
Nevertheless, even if Libya restores production it’s unlikely that global oil supply will be out of the black, especially as the US prepares to slap sanctions on Iran from mid-November.
Saudi Arabia, which holds 18% of the world’s oil reserves, has in the meantime said it could bring relief by dumping two million barrels a day on world markets.
Otunuga warned though that this could send investors into a tailspin as they tried to make sense of “themes driving prices”.