Six factors that may put a brake on oil rally
- Category: Libya News
- Created: Monday, 09 January 2017 22:04
Members of the Organization of the Petroleum Exporting Countries (OPEC) have significantly reduced oil production in accordance with an agreement made by the cartel last year.
As a result, global oil supply glut has started to wane gradually and crude prices have been on a rise with benchmark Brent Blend set to touch the psychological mark of $60 per barrel.
Saudi Arabia, Kuwait, UAE and Iraq have begun to reduce their produce to match their commitment of a cut of 1.2 million barrels per day from January 1, 2017. Producers from outside the 13-country member group have agreed to cut production by 558,000 bpd under the OPEC deal to support prices.
However, there are a few developments taking place simultaneously which can potentially risk the oil price rally. Upsurge in crude production in Iran and Libya, who are exempted from the OPEC deal, a strong dollar and a likely recovery in US oil output may cast a shadow over the long-awaited enthusiasm.
Libya lifts blockade
Libya’s oil production is close to 700,000 barrels per day after the restart of two major oil fields after a two-year blockade was lifted three weeks ago. Even though the national output remains far below the more than 1.6 million bpd that Libya was producing before its 2011 uprising, the National Oil Corporation says it hopes to raise production to nearly 900,000 bpd by March.