The global oil market is well supplied and can cope with the loss of Iranian crude to Western sanctions, oil officials and executives, including the heads of Total and Royal Dutch Shell, said this week.
An increase in global crude supplies and falling crude prices have helped cushion the impact of sanctions targeting Iran’s controversial nuclear programme.
“The market is well supplied. There is no shortage,” the head of French oil firm Total said at a conference in Malaysia when asked if he was concerned about the loss of Iranian supply on the oil market.
Total’s chief executive Christophe de Margerie added that Brent crude prices had seen “a very important decrease.”
Troubles in the eurozone have overshadowed the tensions between the West and Iran, Opec’s second-largest oil producer, after Brent prices hit a record high of $128 a barrel in March.
Speaking at the same conference, Royal Dutch Shell CEO Peter Voser said oil prices will weaken further in the second half of this year as demand reacts to a slowing global economy, while international political tensions were fading.
“Global demand is softening, we have got recessionary elements in Europe, a small slowdown in Asia Pacific,” Voser told Reuters in an interview earlier this week.
“At the same time, some of the geopolitical elements of price volatility over the past few months have kind of receded, and therefore we see a softening of prices which I expect to go well into the second half of this year.”
Ahead of a meeting of the Organisation of Oil Exporting Countries (Opec) next week, Algerian Oil Minister Youcef Yousfi also said the market could cope with a drop in Iranian supply.
“Yes, there is enough oil in the market,” the minister said when asked whether there is sufficient crude to offset the impact of Western sanctions on Iranian exports.
An increase in global crude supplies and falling prices put the market in a better position, said Daniel Yergin, IHS CERA chairman and author of the pulitzer winning work “The Prize: The Epic Quest for Oil, Money, & Power”.
“This is a very powerful flotilla of sanctions that are heading towards Iran, it’s never been this powerful,” he said.
“What makes a big difference is that there is alternative oil in the market. There is a very concerted effort to ensure that alternative supply that will come into the market to enable the sanctions to work.”
Top oil exporter Saudi Arabia has boosted output to the highest level in decades to cool global oil prices and cover any supply disruption.from gulf times.