March crude oil output loss at 1.2mbpd: Survey
23 March, 2012
Crude oil output losses in March could add upto 1.2 million barrels per day (mbpd), a survey by Reuters shows. Current physical oil markets are tight in the wake of Iran sanctions and fears of an African supply disruption.
In March, Civil unrest, technical glitches and adverse weather all combined to cause an unprecedented supply disruption of 1.2mbpd, the report finds. This would put it at par with the 1.4mbpd loss of export volumes from Libya during its crisis and will provide the United States a justification if it does decide to release stocks from its Strategic Petroleum Reserve (SPR).
Increasing sanctions on Iran has forced countries to cutback on their Iranian oil imports, thus reducing the total availability of oil supplies. Add to that the tensions in Africa, especially from Nigeria and South Sudan, from wherein supplies may be disrupted due to domestic and border disputes.
Iran is however the major cause of concern. IMF predicts upto a 30% gain in oil prices in the case of a supply side shock from Iran. "If there was for instance a major shortage of export of oil from Iran, it will certainly drive prices up, at least for a period of time. We believe that it will be in the range of 20-30%”, IMF Managing Director Christine Lagarde said while adding that a “sudden and brutal rise in the price would have serious consequences on the global economy at large and will impact particularly the oil importing countries and amongst them low income countries”