Qamar Energy reveals main factors affecting 2019 oil market

By  Trend

The regulations on sulphur content of shipping fuels will be approaching and will reduce the demand for heavy fuel oil, Robin Mills, the CEO of Qamar Energy in Dubai, told Trend, commenting on main factors that will affect the oil market next year.

He pointed out that more US shale oil can be expected to reach the market; demand is uncertain and depends on the global economic outlook; Iranian sanctions may take more oil off the market; and there is a growing disconnect between the increased supply of light oil and the demand for heavy/medium oils to produce diesel.

"Rising US shale oil production has been able to offset the loss of oil from Iranian sanctions and decline in Venezuela. OPEC cuts also provide some buffer of spare capacity to be returned to the market if required. The US will seek to tighten sanctions on Iran in 2019 after granting 180-day waivers to select importers in November 2018. Increased production from Saudi Arabia, Russia and others will be required to offset this, if demand remains strong," added the expert.

Further, speaking about the recent fall in oil prices despite the announcement of Saudi Arabia to decrease its oil production by 500,000 barrels per day and the expected decline of oil supply by Iran, Mills noted that the price fell because of an expectation of very strong US shale oil supply, more negative demand outlook, and because of the waivers on US sanctions on Iran granted by the US in November.

Also Saudi Arabia had sharply increased production since the middle of 2018, he added.

US President Donald Trump declared Washington’s withdrawal from the nuclear deal with Iran in May 2018. Trump also announced the restoration of all sanctions against Iran, including secondary ones against other countries doing business with Iran. The United States re-introduced part of the sanctions against Iran on August 7, while the second batch of the sanctions came into effect on Nov.5.

The US government has agreed to let eight countries, including South Korea and Japan, as well as India, keep buying Iranian oil after it reimposes sanctions on Tehran. The waivers have been granted for six months.