According to the Energy Information administration the price of Brent Crude has been uncharacteristically stable over the last year.
Their figures show that the July average of $107 per barrel was the 13th consecutive month in which Brent Crude prices stayed within a $5 price per barrel range…
As you can see, compared to the fluctuations of recent years, the global benchmark for oil has seen little movement. And the reasons for the stability are not too surprising if you’re a regular reader of these pages.
From the EIA:
Although supply growth from non-OPEC countries has outpaced world consumption in the past year, its potential price-reducing effect has been offset by unplanned supply outages among producers in the Organization of Petroleum Exporting Companies.
Now that the U.S. and Canada produce a combined 18.2 million barrels per day compared to only 14.7 million barrels per day in 2012, oil prices are much more stable.
In 2012 Brent crude fluctuated from highs of $125 per barrel in March to lows of $95 per barrel in June.
Of course, they could be lower, but major disruptions in supply from Iraq and Libya have kept the price elevated.
But this upward pressure could soon change, resulting in a dramatic drop in Brent prices…
As the U.S. steps in with more advisers and a multitude of air-strikes in Iraq, Libya’s National Oil Company (NOC) announced yesterday that oil exports would begin again.
Libya has the largest proven reserves in all of Africa at 48 billion barrels, but after the violent ouster of Muammar Gaddafi, oil production and exports sputtered due to violent attacks by multiple factions vying for control of the region.
Good news has been coming out of Libya recently though, as they have grown their oil output to 562,000 barrels per day thanks to a deal with federalist rebels that allowed four major ports in the east of the country to re-open.
Even though the number is much lower than the 1.4 million barrel per day output seen as recently as last year, it is still an incredible improvement from the low 100,000 barrel per day production seen at the beginning of 2014.
Yesterday, Mohamed El Harari, a spokesperson for NOC, said that an aframax tanker started loading 600,000 barrels of oil for export at the massive Es Sider port.
According to Libyan oil officials the Es Sider port has 4.5 million barrels in storage as a result of the year-long blockade, but once those stores have been exported the fields that feed the Es Sider will resume production.
And if Libya can maintain the accord with rebels who blockaded their exports, they can help reverse OPEC’s recent decline in production by 600,000 barrels per day in the last 13 months.
Thus ending the upward pressure on oil prices and preventing a catastrophic climb like we saw before the recession.