International Energy Agency, Saudi Arabia Bolsters Oil Exports
Friday, February 25th, 2011
The report released today by the International Energy Agency (IEA), indicates that the oil exports from Saudi Arabia have increased since the Libyan protests started. As Bloomberg indicates, the Libyan unrest has caused a shutdown of oil production by nearly 50 percent of total production.
This has decreased the overall output from 1.6 million barrels per day to roughly 850,000 per day. As a result, the Saudis are increasing shipments in order to fill the gap in the oil markets. While an increase in export volume has been confirmed by the IEA, they remain unsure as to how much the increase has actually been.
Notably, Saudi oil is reputed to have comparatively higher sulfur content than Libyan oil. Nonetheless, the Saudi Arabian ‘Super Light’ oil is allegedly of similar quality. Thus, according to the IEA, this makes the two oil types ‘imperfect substitutes.’ The IEA’s oil supply analyst, Diane Munro, mentioned that the increasing flexibility and proficiency of oil refineries in recent years will have a mitigating effect on this trend.
Nonetheless, other analysts have expressed that the crude oil quality is a significant cause for concern. Platts has stated that the European refineries such as those in Austria, France, Greece, Switzerland, and Spain have been particularly affected by the oil disruptions caused by the Libyan conflict.
David Fyfe, the head of IEA's Oil and Markets Division, said in the same Platt article that the February and March world supply numbers are between 500,000 and 600,000 barrels per day lower than they were from the highs posted this past November.
Fyfe went on to say that the losses are catalyzing efforts to replace the lost Libyan oil imports. He said that there will most likely be efforts to bring oil in from cargoes on the North Sea and West Africa.
Article by Andrew Timm
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: iea , international energy agency , oil , saudi arabia
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