Published: Tue, September 25, 2018
Business | By Tara Barton

OPEC Sees Competition With U.S. Shale Oil Subsiding After 2023

OPEC Sees Competition With U.S. Shale Oil Subsiding After 2023

The tightening USA market came ahead of sanctions that Washington plans to implement against Iran's petroleum exports from early November. Brent could rise to US$100 for the first time since 2014 as the market braces for the loss of Iranian supplies due to USA sanctions, according to Mercuria Energy Group Ltd. and Trafigura Group.

"We're on the verge of some significant volatility in Q4 2018 because depending on the severity and duration of the Iranian sanctions, the market simply does not have an adequade supply response for a 2 million barrel a day disappearance of oil from the markets", Jaeggi said.

"It's going to be significantly less than it was, and probably lower than most people expected when the sanctions were announced - hence the higher prices", Luckock said at the APPEC event.

Benchmark Brent crude hit its highest since November 2014 at $80.94 per barrel, up $2.14 or 2.7 per cent, before easing to around $80.65 by 1335GMT.

Saudi energy minister Khalid al-Falih said at a press conference in Algiers that he did not "influence prices".

Oil prices were at their highest levels since 2014 in trading Monday, after the Organization of Petroleum Exporting Countries decided not to raise output. U.S. commercial crude oil inventories are at their lowest since early 2015 and although USA oil production is near a record high of 11 million barrels per day (bpd), subdued United States drilling activity points toward a slowdown in output.

"South Korea was the first country to halt Iran's oil imports following the US sanction threats against the country", Kasra Nouri, the public relation manager of the ministry, was quoted as saying by SHANA news agency.

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The message from Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries (OPEC), and its ally Russian Federation is that there is no need for extra crude in the market.

The U.S. decision to re-impose sanctions on Iran is already forcing refiners to look elsewhere for supplies of the heavy, sour crudes supplied by the Islamic Republic.

Russia's energy minister Alexander Novak on Sunday appeared to back a continuation of the partnership between OPEC and non-OPEC member states.

Sales of Iranian crude have fallen as buyers remain wary of penalties from sanctions due to take effect from November.

USA crude oil production set a new record over the summer producing 10.8 million barrels per day.

Brent crude futures were at 79.84 dollars per barrel. The biggest source of new global supply, US shale, is also experiencing growing pains as pipeline bottlenecks and workforce issues may hamper growth, he said. "We will remember", Trump said, adding, "The OPEC monopoly must get prices down now!"

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