OPEC Heads Of State Gather In Saudi Arabia

Investment bank Simmons & Co’s commentary on the International Energy Agency’s August Oil Market Report highlights geopolitical risk facing global oil supply. The report shows that Opec supply fell by 165,000 barrels per day from the previous month, even as Saudi Arabia lifted output to a 12-month high.

“Domestic developments in member countries has taken meaningful supply out of the market – a trend which should intensify in coming months,” the bank warned in a note to clients.

“Civil unrest in Libya has cut exports to the lowest level since the 2011 civil war (supply down 350 kb/d m/m) and production has further fallen to just 400 kb/d as of early August – down 1 mb/d from April levels.  Pipeline attacks in Iraq have reduced supply below 3 mb/d for the first time in 6 months, with planned infrastructure work in Sept expected to cut exports by 300-500 kb/d.  Security issues in Algeria and Nigeria continue to negatively impact supply as well.

“Civil unrest is not limited to OPEC countries, with recent supply interruptions in Egypt, Syria and Yemen.”