Global Crude Oil Disruptions – Who Should Care?
The U.S. Energy Information Agency publishes, among many charts and tables, a summary of worldwide energy consumption by OPEC (Organization of the Petroleum Exporting Countries) and the OECD countries (Organization for Economic Cooperation and Development, or 34 Western democracies). The EIA (the U.S. Energy Information Administration) projects that the supply of Global Petroleum and Other Liquids to be 101.6 million barrels per day in 2019, while projected demand is 100.82 million barrels per day for the same period. While projected supply exceeds demand on a global basis in 2019, indicating, at first glance, price stability, many other considerations might impact global oil prices, a phenomenon to be considered when confronting apparent disruptions.
Although oil production originating in Saudi Arabia declined by almost half due to the recent drone attacks on certain properties , Bloomberg reports that production is expected to recover to pre-attack levels by the end of September. Monitors of oil markets should remain cognizant of:
Rapid reconstruction of certain, but not all oil producing fields
Crude oil finds a home where it is needed and where processing capacity meets its chemical composition; and not all grades are created equal
The critical contribution of innovation to energy security
As a few of the many factors that contribute to price fluctuations, and disruptions.