Oil prices began the New Year at their highest level since 2014 against the background of anti-government protests in Iran, which currently produces over four million bpd (barrels per day).
Brent crude futures, which is regarded as an international benchmark, traded at over $67 a barrel as the year began.
While the protests are seen as the most significant challenge to Iran’s clerical leaders, and therefore potentially disruptive to oil production, the markets have other reasons to be bullish about oil prices. Despite the Forties pipeline in the North Sea coming back online and a pipeline outage in Libya being rectified, strong economic growth, especially from China, and falling US inventories, helped support oil prices. US commercial oil inventories are now almost 20% lower than their historic high of 536 million barrels in March 2017.
The director of the energy consultancy firm Trifecta, Sukrit Vijayakar, was quoted as saying:
“We would not be surprised to see a further (oil price) rise.”
The only element hindering the market outlook is the rising trend of US oil production, which is drawing closer to 10 million bpd, although some analysts claim it has already hit this milestone. Higher oil prices are likely to motivate shale oil producers—including ExxonMobil, the supplier behind Mobil UK stockists—to ramp up their tight oil production. Many shale operations can be quickly stopped or started in response to oil prices, so higher oil prices can lead to previously uneconomical shale plays coming back online.
