OPEC+ Continues to Insist Iran Sanctions Won't Disrupt Market

by Ship & Bunker News Team
Wednesday September 26, 2018

Sentiment in the form of fear may rule in crude trading circles and be the chief reason for current high oil prices, but those who actually produce the oil have a decidedly more optimistic outlook for the health of the commodity - and once more, the usual suspects gave assurances on Wednesday that all won't be as bad as some analysts think, albeit with some reservations.

Malam Mele Kyari, head of crude oil marketing at Nigeria's state oil firm NNPC and also the country's  representative for the Organization of the Petroleum Exporting Countries (OPEC), told Reuters that the cartel - despite deciding last weekend not to increase output to counter fears of the Iran sanctions causing a huge crude price spike - "will do everything to stabilize, to balance the market."

He added, "It's obvious that if you have high prices it'll affect demand, so you have to do some market balance."

However, he also noted that "I'm sure you're also aware that there's a limit to what they can do; you must have the spare capacity."

Kyari went on to state that Nigeria is planning to increase its crude oil, condensate output by 100,000 barrels per day (bpd) by the end of the year, up from about 2 million bpd currently; this level will increase to 2.3 million bpd next year.

Even bolder assurances were delivered on Wednesday by Russia, with Alexander Novak, energy minister for the former Soviet Union, saying that oil prices of between $70 and $80 were balanced, and that OPEC and non-OPEC countries had the ability to increase output in the event of an oil deficit on the market.

Perhaps inevitably, these statements will fall on deaf ears: earlier this week Saudi Arabia and Algeria as well as Russia tried to assure media that the global crude market was actually healthy and OPEC members were more than able to make up for any shortfalls - but that didn't prevent prices on Monday from skyrocketing.