Inside Oil
Oil price can only go in one direction
The oil price has been on the rise for months. In recent weeks, the price has also picked up to almost $80 a barrel. It is likely that the advance will continue. The surplus, which kept the price under pressure for a long time, has virtually disappeared from the market.
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Choose the subscription that suits youAccording to the oil cartel OPEC, oil inventories in March were 9 million barrels above the 5-year average. In January 2017, the difference with the 5-year average was still 340 million barrels. It can be concluded from this that the production limiting measures of the OPEC countries are working. This should lead to higher prices; The fact that this means is pursuing the goal is evident from the rise in oil prices.
Rising consumption
Since the start of the second quarter, the price of 1 barrel of Brent oil has risen by almost $10 to around $78. In line with this, fuel prices are also increasing. For example, 1 liter of Euro 95 now costs €1,77, while the diesel price has risen to €1,45 per liter. These levels have been unusual for 3 years.
In addition to declining inventories, the improving economy is driving higher consumption. This drives up the oil price. The International Energy Agency (IEA) projects that global oil demand will amount to 2018 million barrels per day in 99,3, compared to a daily consumption of 97,8 million in 2017.
Sanctions Iran
The fact that the President of the United States (US), Donald Trump, last week scrapped the nuclear deal with Iran also gives a price driving effect. This means that the economic sanctions against Iran will also apply again. This ensures that Iranian oil production is not taken by Western countries. Iran is the third largest oil producer in OPEC and the third largest exporter in the world. According to Bloomberg, Iranian production accounts for approximately 2% of the global oil pool.
Other countries in the Middle East (such as Saudi Arabia, Kuwait and the United Arab Emirates) have indicated that they have sufficient supplies on hand to absorb the lost oil. This ensures relative calm in the tense oil market. Because oil producer Venezuela is also causing unrest. Oil production in the financially troubled country is declining. As a result of the crisis, oil production has fallen to its lowest point in 30 years. However, Venezuela's impact is relatively small.
Rising trend continues
The production limiting agreements, which non-OPEC country Russia also adheres to, will in any case apply until the end of 2018. This means that the oil tap will not suddenly open again in the coming months. The economic signals in the world are still green. Low interest rates in the eurozone and the US are likely to stimulate investment and transport movements, which will maintain oil demand. The undertone on the oil market is therefore rising. An oil price of $100 per barrel in the medium term is therefore considered possible.
In just 2 years, the oil price has almost doubled.