A very interesting post on The Oil Drum:
We can put the situation almost entirely down to two things: the fact that Libyan production has plummeted, and that Saudi Arabia has made no significant move to compensate. In fact, Saudi Arabia slowed down production increases that it had been making in prior months....So the world has abruptly lost something like 1.3mbd of oil production between mid February and March.
Read the full story on TOD.
Mike,
ReplyDelete1.3mbpd is not a lot on global terms. Libya is the world's 17th highest oil producer and does not provide anything of significance to UK oil consumption.
The real question is why the media are trying to make so much of Libyan oil and why Saudi appears to be unable to compensate. I think we're seeing the Saudis realise that there ain't a lot left down in that there hole!
Hi John,
ReplyDeleteYou're probably right that Saudi are realising they can't pump much more, or that if they do so it will damage their oil fields.
But 1.3 mbpd is still an important amount, because of "demand/price elasticity" - basically, oil prices have to go up a lot to make people cut usage. So 2% of missing supply can mean a large (10-20%?) price rise before 2% of the demand disappears...
Mike