Unexpected disruptions in supply have helped the oil price to increase. According to ANZ bank supply disruptions – excluding output falls in the US – accounted for 2.5 million barrels of daily production. This almost completely erases the over supply that has forced prices down since 2014.
ANZ expects supply disruptions to linger, creating a increasingly supply risk premium in the market that will allow the oil price to rise. In Nigeria intruders are blocking access to Exxon Mobil’s terminal, the largest crude stream in Nigeria. “Loading schedules have been interrupted at three of the five primary export terminals in Nigeria due to sabotage, with a fourth (Qua Iboe) interrupted by an operational incident; we estimate over 450,000 bpd is affected,” U.S. investment bank Jefferies said.
As a consequence, Nigeria’s oil output has fallen to a 22 year low of under 1.4 million bpd. In Libya, internal conflict is hampering oil production. In the US, producers are being hit with financial issues and bankruptcies, which have created a shortfall of some 8.79 million bpd. In Canada wildfires forced closures and this has accounted for a loss of around 1 million bpd.
In Venezuela, the state-owned oil company PDVSA is struggling to stay afloat as the country enters a deep political and financial crisis. Crude output has fallen to 2.53 million bpd, down from 2.72 million bpd a year ago.
Russia and the Middle East continue to output at record rates, and oil customers are not at risk because of global reserve supplies. However, the shortfall may help oil prices creep back up.