Washington experts see oil markets as ‘stable’
WASHINGTON - Even as oil prices went down in February and sanctions hit Venezuela and Iran, oil experts in Washington, said they viewed the short-term oil market as generally “stable.”
“We, broadly speaking, see a balanced market this year,” Michael Wittner, global head of oil market research at Societe Generale, said February 21 at the Centre for Strategic and International Studies (CSIS) in Washington.
OPEC and Russia cut oil exports in January, which Wittner called “very active market management,” and the United States’ sanctions on Venezuela limited oil supply there, as have US sanctions on Iran.
The United States increased exports by 2 million barrels per day (bpd) of crude oil from last year, to 11.7 million bpd, the Energy Information Administration (EIA) said. By the fourth quarter of 2020, EIA said it expects the United States to be a net exporter of crude oil and petroleum products of about 1.1 million bpd.
“We’ve had kind of a wild ride,” said Howard Gruenspecht, senior associate of the energy and national security programme at CSIS. He said oil expenditures were 13% of US GDP at the time of the Iranian Revolution and 23% in 2017. US crude oil production nearly doubled over the past decade, he said.
Still, attention is being paid to potential problems, such as instability in Iran, Venezuela and Libya. In the United States, political calls for increased renewable energy transformation will also affect the future of oil.
Sanctions haven’t had a huge effect on world economies, experts said.
Kevin Book, a senior associate with the energy and national security programme at CSIS, said oil from Iran could be replaced with Russian or US offshore “medium-sour” crude oil, so it shouldn’t affect the market.
“No one really believes go-to-zero is the next step,” Book said, referring to a threat from US national security adviser John Bolton to use sanctions to push Iranian oil exports to zero. If it were, it would likely force up prices for other supplies of oil.
“We see OPEC meeting demand,” said Ann-Louise Hittle, vice-president of oils research at Wood Mackenzie. However, she said it was “crucial” for OPEC to look at the oversupply of the future. As energy sources change, she said supply would peak by 2036.
Edward Morse, global head of commodities research at Citigroup, said he doesn’t see the market as stable, especially considering record oil prices suddenly dropping as China argues with the United States about trade.
“The last quarter was not stable,” he said.
He said Venezuela would likely “take a really long time, in our judgment, to get production up again.” He said he wondered where the capital would come from to rebuild Venezuela’s oil industry.