Is There an Oil Shortage in 2019?
Jun 07 2019 Read 209 Times
The oil industry has endured a rocky start to the year, with growing concerns that supply outages could force the market into deficit. Whether the market is in short supply is a question on the lips of analysts, investors and producers across the globe, with some experts warning that the situation is about to get tighter and others suggesting it's a temporary slump.
Saudi Arabian energy minister Khalid al-Falih was unable to confirm if the market is facing a supply shortage, instead pointing out that global inventories are still growing. He also references a recent International Energy Agency (IEA) report that estimated the global oil market enjoyed a 700,000-bpd surplus in the first quarter of 2019.
Global oil industry hit with major supply issues
Analysing global markets, it's hard to ignore the supply issues that are currently plaguing the oil industry. The United States has abolished all waivers for Iranian oil exports, while Venezuelan production continues to plummet following political turmoil and a deepening economic crisis. Furthermore, Russia is facing major issues in the wake of the discovery of contaminated oil. OPEC has also imposed production cuts which have forced producers to withhold medium and heavy grades from the global market.
“The OPEC+ deal, US sanctions against Iran and Venezuela and Alberta’s output cuts have significantly tightened supplies of medium-heavy oil. Compared to November, supply of these grades has fallen by nearly 3 mb/d,” reads a recent Oil Market Report issued by the IEA.
Heavy oil takes a hit
The supply issues have had a major impact on the availability of heavy and medium oil, with medium oil supply down by 1.52 million bpd since the end of 2018 and heavy oil supply hit by a 640,000 bpd decline. Meanwhile, light oil is experiencing a glut. Supplies have increased by 1.85 million bpd in April 2019 compared to April 2018, a surplus that's largely thanks to a boost in American production. Theoretically, the increase in light oil could offset the heavy and medium oil shortage. However, as refineries aren't designed to universally process all types of grades the surplus and shortage don't cancel each other out.
Supplies may be wavering but that doesn't mean producers can drop the ball on environmental regulations. Introducing the latest gas chromatography (GC) methods, 'Analysis of Sulphur in Light Hydrocarbons According to ASTM D5623 Using Shimadzu's SCD-2030' spotlights the increasingly strict sulphur quality control policies being introduced around the world
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