Oil Price Increase Raises Concerns of U.S. Supply Outlook

Rising prices coupled with growing tensions with the Middle East could threaten the U.S. oil supply, despite a substantial increase in global output.

According to Reuters, oil prices were clocked at $70 a barrel this week—an increase of 7% in March and more than 5% overall in 2018. As the May deadline nears for the U.S. to decide whether it will withdraw from the Iran nuclear accord, oil-related concerns are fueled by large exporters across the globe that many say are “controlling supply.”

PVM Oil Associates Analyst Tamas Varga said in the Reuters report that non-OPEC (Organization of the Petroleum Exporting Countries) producers boost oil demand throughout the world.

“The price strength of the last couple of weeks is down to two factors,” Varga said in the release. “The first one is a stable OPEC output level which leads to impressive compliance (with an oil supply-cutting deal). The second one is supply-side geopolitical developments in Venezuela, Libya and Iran, the most acute of which is Iran.”

Last week, however, Moody’s Investors Service reported a shift in its global oil and gas sector rating from stable to positive, citing a potential 13% to 18% growth in earnings. This was attributed to the sector’s EBITDA and the cut in production costs in 2015 and 2016, which improved operating margins.

-Andrew Michaels, editorial associate

No comments:

Post a Comment