The International Energy Agency (IAE) has announced that it is the continuing conflict in the Middle East and in the Northern parts of Africa that are preventing oil prices from dropping in their latest analysis of the current market.
On a more positive note the company identified that global oil demand was increasing again as certain countries are beginning to experience economic recovery. This has been matched by an increase in oil production, which paints a promising picture for the current workings of the oil business.
They also estimated that the current global demand for oil was a massive 91 million barrels a day which represents an increase from the figure they estimated earlier on this year.
However, the problem is that the Organisation of the Petroleum Exporting Countries (OPEC) is comprised of mostly countries from the Middle East and North Africa where there currently a great deal of instability and strife.
Countries such as Libya, Iraq, Iran, Kuwait, Angola, Gabon and Algeria are all part of the OPEC group and are currently struggling with internal and external problems that are affecting the price of oil. Lack of supply from these areas coupled with the rising demand for oil has meant that prices are being forced to be kept high despite the fact that economic recovery has greatly aided the oil industry.
This means that the task to address the increase of demand for oil has been undertaken by countries outside the OPEC group, primarily the US.
The demand is set to increase a further 1.1 million barrels a day next year representing an increase of over 1%.
However, the US has recently experienced a purple patch in its oil production with an estimated 10 million barrels a day being distributed in the last quarter alone.
Officials from the US have described the period as ‘the highest production period in decades”.
The US is currently suffering a crisis with its debt as politicians from both the Republican and Democratic party continue to clash about increasing the ‘debt ceiling’. Worries have risen about the outcome of the situation and how it will affect the oil industry.
It is important that the US keep up their role as the world’s primary oil provider at this time as the rate of demand continues to increase at an exponential rate. They are currently on course to become the largest oil producer in the world outside the OPEC group though the latter’s struggles would mean they were the most prominent.
A Saudi Arabian prince recently voiced his concerns about the American’s growing power in the oil industry and cited his concern about their ‘fracking’.
It is currently predicted that the fracking will continue to increase at a brisk pace in the US meaning that it will surpass Russia as an oil provider in the near future.
Meanwhile, Iraq’s prime minister has announced that a £3.7 billion contract had been made and signed with the Swiss based organisation Saterem. The partnership will see the company set up and manage an oil refinery in the South of Iraq and is hoped will help oil production levels rise in countries from the OPEC group.