Unplanned outages on the oil-producing US Gulf Coast as a result of Hurricane Ida are set to wipe out the additional supply that is being added to the market by the Opec+ group of producers, the International Energy Agency (IEA) says.
The tropical storm shut in an estimated 1.7 million barrels per day of output along the US Gulf coast with potential supply losses set to reach 30 million barrels, the Paris-based agency said.
Global supply fell 540,000 bpd in August, compared with the previous month, to reach 96.1 million bpd, with the volumes set to hold steady through September.
"An uptrend in supply should resume in October as Opec+ continues to unwind cuts, outages are resolved and as other producers increase," the IEA said.
Opec+, which refers to the group of producers led by Saudi Arabia and Russia, have been drawing down their supply restriction pact and plan to bring 2 million bpd by the end of the year.
The group is set to meet on October 1 to action a further 400,000 bpd of supply for October.
Oil prices continued to trade higher on Tuesday. Brent, the international benchmark for crude, was up 0.64 per cent at $73.98 per barrel at 2.03pm UAE time. West Texas Intermediate, which tracks US crude grades, was up 0.62 per cent at $70.89 per barrel.
"Oil prices are rising as supply-side constraints tighten. Oil producers have yet to recover from Hurricane Ida's devastation, and they are now bracing for another tropical storm, Nicholas, which is expected to be as powerful as Hurricane Ida," said Naeem Aslam, chief market analyst at AvaTrade.
"Almost 44 per cent of the area's oil supply has been cut off," he added.
The IEA also revised its demand expectations for the third quarter of this year by 200,000 bpd after consumption fell for three straight months in a row.
The energy agency expects oil demand to grow by 5.2 million bpd in 2021 and 3.2 million bpd in 2022.
"Already signs are emerging of Covid cases abating with demand now expected to rebound by a sharp 1.6 million bpd in October, and continuing to grow until end-year," the agency said.
Global oil demand is expected to be higher than pre-pandemic levels in the second half of 2022, according to the IEA. However, overall consumption next year is set to remain just under 2019 levels at 99.4 million bpd.
The IEA's assessment is more bearish than Opec, which estimated that demand in 2022 could exceed pre-pandemic levels in its latest monthly market report.
Opec expects oil demand for 2022 to reach 100.8 million bpd as the crude exporting group sees strong economic recovery on the back of widespread inoculation efforts.
The group also revised upwards its estimated demand growth for 2022, up by 900,000 bpd to 4.2 million bpd amid expectations of higher levels of economic activity and fewer movement restrictions.
For 2021, Opec revised down its demand growth estimates for the fourth quarter by 120,000 bpd over concerns about the Delta variant's impact on energy demand. The Delta variant of coronavirus, which originated in India, is a particularly virulent strain that has been responsible for a surge in infections across the world.
"Opec expects demand to improve by 6 million bpd in 2021 and 4.2 million bpd in 2022, which means this market will stay in deficit this year but that should change in the first quarter," said Edward Moya, senior market analyst at Oanda.
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
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- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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Where can I submit a sample?
Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.
Collection centres in Abu Dhabi include:
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Iraq negotiating over Iran sanctions impact
- US sanctions on Iran’s energy industry and exports took effect on Monday, November 5.
- Washington issued formal waivers to eight buyers of Iranian oil, allowing them to continue limited imports. Iraq did not receive a waiver.
- Iraq’s government is cooperating with the US to contain Iranian influence in the country, and increased Iraqi oil production is helping to make up for Iranian crude that sanctions are blocking from markets, US officials say.
- Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, pumped last month at a record 4.78 million barrels a day, former Oil Minister Jabbar Al-Luaibi said on Oct. 20. Iraq exported 3.83 million barrels a day last month, according to tanker tracking and data from port agents.
- Iraq has been working to restore production at its northern Kirkuk oil field. Kirkuk could add 200,000 barrels a day of oil to Iraq’s total output, Hook said.
- The country stopped trucking Kirkuk oil to Iran about three weeks ago, in line with U.S. sanctions, according to four people with knowledge of the matter who asked not to be identified because they aren’t allowed to speak to media.
- Oil exports from Iran, OPEC’s third-largest supplier, have slumped since President Donald Trump announced in May that he’d reimpose sanctions. Iran shipped about 1.76 million barrels a day in October out of 3.42 million in total production, data compiled by Bloomberg show.
- Benchmark Brent crude fell 47 cents to $72.70 a barrel in London trading at 7:26 a.m. local time. U.S. West Texas Intermediate was 25 cents lower at $62.85 a barrel in New York. WTI held near the lowest level in seven months as concerns of a tightening market eased after the U.S. granted its waivers to buyers of Iranian crude.
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Starring: Denzel Washington, Bill Pullman, Melissa Leo, Ashton Sanders
Three stars
