Nigerian militants and Canada's oil sands fires offset increased Iranian production

Bloomberg/Fuel Fix:
The International Energy Agency said Thursday that higher than expected Iranian oil production has helped stabilize the global oil market by offsetting concerns generated by wildfires in Canada and violence in Nigeria.

In its monthly report, the Paris-based IEA said global oil output rose to 32.7 million barrels a day in April, a figure boosted by Iran as its production increased faster than expected following the lifting of international sanctions earlier this year.

The IEA is forecasting a sharp drop in the global oil supply surplus by the year’s end, which should push the market toward “much-anticipated balance” after a volatile couple of years.

Oil prices fell in April after leading producers failed to agree on production cuts, but have since risen after troubles in oil-producing Canada and Nigeria threatened output.

The IEA said it’s unclear how deeply the damage from a devastating, ongoing wildfire in Canada’s oil sands town of Fort McMurray will hurt overall production.

In Nigeria, Shell closed the terminal exporting the country’s benchmark Bonny Light crude oil Wednesday and evacuated workers from a threatened oil field after new deadly violence by militants demanding a bigger share of the country’s oil wealth. Chevron’s Escravos oil and gas facility closed after a bomb attack.

The IEA also noted concern about falling production in Libya, which is split among warring factions, and economically atrophying Venezuela.
Nigeria's problem with corruption appears to be compounded by bandit greed causing a cutback in production in general.  It is a situation worth watching more closely for a potential civil war that could further disrupt supplies. Libya and Venezuela are also special cases where government incompetence and internal disputes have reduced production.

The situation in Canda is probably more of a short term problem.  The Canadians should be able to get control of the fires and return to production over time unless the new liberal government decides to get out of the carbon-based fuels business.


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