International oil prices fell slightly on Tuesday, but still hovered at a three-month high. Oil prices have performed well this year. Affected by the geopolitical situation and the reduction in U.S. crude oil inventories, 2019 is expected to be the best year for the oil market in the past four years. But can oil prices still be so impressive in 2020?
Iran hopes to increase daily offshore oil production Increase 85,000 barrels
The Iranian Offshore Oil Company (IOOC) is currently implementing projects worth $2.6 billion that are expected to increase Iran’s daily offshore oil production, Iranian media reported on Monday. 85,000 barrels.
IOOC head Alireza Salman-Zadeh said the Iranian state-owned offshore oil company has awarded multiple projects to Iranian service contractors. The contracts include the drilling, completion and repair of 40 wells, as well as the construction and installation of wellhead equipment and five offshore platforms. Salman-Zadeh said the company was working to increase oil production from the Siri field in the Persian Gulf under a contract with an Iranian company.
Considering that Iran’s oil, shipping and financial industries are subject to severe U.S. sanctions, Iran can currently only maintain or increase its offshore oil production by signing contracts with domestic companies because the United States re-imposed sanctions in May 2018. Foreign companies fled Iran after sanctions were imposed.
Western oil majors were the first to withdraw from Iran after sanctions, but earlier this year even China National Petroleum Corporation withdrew from the development of Phase 11 of the giant South Pars natural gas field. This is a heavy blow to Iran’s oil and gas industry.
However, Iran is still exporting oil, especially to China, but it has significantly increased the secrecy of shipping oil overseas and said it is using all possible means to export crude oil.
At the same time, OPEC’s latest data shows that Iran’s crude oil production dropped by another 45,000 barrels per day in November, averaging only 21.02 million barrels. Iran was OPEC’s third-largest oil producer before U.S. sanctions were imposed. By comparison, Iran’s crude oil production averaged 3.813 million barrels per day in 2017.
Oil prices are expected to have their best year since 2016
Data released by the U.S. Energy Information Administration last Friday It showed that U.S. crude oil inventories fell by 5.47 million barrels in the week to December 20, to the lowest level in two months. Decreasing oil supply has once again pushed up high oil prices caused by news of an easing of international trade and OPEC’s support for future production cuts. December’s production cuts also eased concerns that non-OPEC countries would increase oil production.
A range of geopolitical risks have also played a role in rising oil prices this year. Iran hijacked an oil tanker in the Strait of Hormuz on Monday, while the United States launched air strikes on five Iranian-backed bases in Iraq and Syria on Sunday. The back-to-back incidents have raised fresh concerns about rising tensions between the two countries, as a heightened conflict could complicate access to global oil supplies.
On September 16, oil prices soared by 20% after two Saudi Aramco oil facilities were hit by drones. The attacks affected nearly 6 million barrels of oil per day, or about 5% of global oil supply.
Saudi Aramco’s new status as a public company may also affect oil prices in the new year. The Saudi Arabian government still owns a majority stake in the world’s most valuable company, and Saudi officials have previously pledged to protect its shares if they fell above a certain point. Any intervention by the kingdom or changes in the relationship between oil companies and OPEC could quickly affect the state of the world oil market.
Oil analyst Nick Cunningham said that just as the growth rate of U.S. shale oil production is slowing down, the crude oil production of other non-OPEC countries is rising. According to JBC data, 2020 may be the year of non-OPEC growth in 15 years. OPEC’s largest supply growth year will reach 820,000 barrels per day. At the same time, the threats of climate change and energy transition have not disappeared. </p
