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Since its inception, the global oil industry has been able to increase its production capacity to prevent rising demand, despite geopolitical challenges. The Arab Petroleum Investment Company (APICORP), based in Dammam, Saudi Arabia, was established in 1975.
APICORP was founded in 1975 as a member of the United Nations Organization. Arab exporting countries (OAPEC), which participated in its financing through the purchase of its shares. The report notes that Iraq may increase its production despite its struggle to liberate the land from a "push". Iran has also been able to increase its production after lifting the sanctions following the signing of the nuclear agreement in 2015. For the first time since 2013, Libyan production has increased by 1 million barrels a day. The planning of the capacity increase also provides for promising increases, the number of rigs increasing in the region and the Government of Kuwait and the United Arab Emirates devoting $ 220 billion. With the imposition of new US sanctions on Iran, which means creating a new geostrategic situation that requires additional energy to cope with the further reduction of OPEC capacity. In the absence of new unused capacity, there will be a new imbalance in the markets if they are not contained.
Supplies from several countries in the Middle East have declined since the beginning of the Arab Spring in December 2010, accompanied by sanctions against Iran. Exports were completely halted in Syria and Yemen, while Libyan output rose from about 1.5 million barrels a day in 2011 to about 220,000 barrels a day. But at the same time, prices have risen and supplies have increased, especially in the United States. At the same time, price increases ($ 100 per barrel) and increased supplies caused market disruptions (lower demand and higher market oil surpluses) and prices deteriorated further. January 2016.
Prices and geopolitical challenges in the Middle East continued to flow positively from the region until early 2015. With the lifting of economic sanctions against Iran in 2016, production Iran increased from 2.9 million bpd during the sanctions period to 3.6 million bpd after the lifting. Iraq has also increased production, despite internal challenges, including the expulsion of "Da" ash and disputes with the Kurdistan Regional Government.
Iraq was able to increase production in the South in 2016 to about 4 million barrels a day. In October 2017, the region was losing about 280,000 barrels a day on its total production of 610,000 barrels a day.
Libya has managed to increase production from 300 to 700,000 barrels a day. Production reached 900,000 bpd in the second half of 2017, then 900,000 bpd, and grew by more than 1 million bpd in the first quarter of 2018.
Saudi Arabia increased its production in the first half of the year. Approximately 500,000 barrels per day in 2016. Iraq also increased production by about 350,000 barrels per day (bpd) in 2016. The GCC maintained its record production rate and did not reduce its production. production before the reduction of OPEC in November 2016.
A period of increased supply has dominated the market for years. This reduced the risks of geopolitical challenges at the time. But the situation has changed since the second quarter of 2014, with the supply of demand having increased considerably. The market balance was overshadowed by a surplus of 1.5 million barrels per day (bpd) since the second half of 2016 until 2017, despite the beginning of the contraction of the surplus in 2017. The resulting supply surplus resulted in an increase of the oil stock of the OECD of 640.2 million barrels In May 2014, it reached a peak of 3110 million barrels in July 2016. This increase in the amount of oil was inventory surplus drove prices down to less than $ 30.
Several factors played a role in the price increase. World petroleum demand increased from 95.2 million bpd in January 2016 to 98.5 million barrels per day end of 2017. The rationing of production of 1.8 million barrels per day by OPEC and its allies, Russia in particular, helped to reduce excess reserves. Thus, the contraction of surplus inventories and production capacity on the one hand, and the growing strategic challenges on the other hand, have led to increased caution on the markets.
The report of APICORP concludes the following conclusions: Between the second quarter of 2014 and the end of 2016. The supply has dropped only after OPEC and its allies, which started on January 1, 2017.
Market fundamentals have changed in 2017. Oil demand has increased and the oil alliance of Saudi Arabia and Russia World Reserves of oil at its normal level for years, etc. Q years, which led to the balance between supply and demand in the market and restore the vitality of prices.
increased geopolitical risks in the Middle East, especially with the US withdrawal from the treaty on the Iranian nuclear deal, which will lead to market fears of excess capacity erosion and the high prices. The Middle East is the only region with excess capacity that can offset the boycott deficit of Iran's exports.
US crude oil could not be a sufficient alternative to offset the deficit and fear a new imbalance in the market. The United States obviously lacks the pipelines needed to transport shale oil. The president is trying to put pressure on OPEC to increase production. This could push the OPEC countries to increase their supplies in order to balance the markets and avoid increasing the supply demand.
An Iraqi energy expert
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