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Iran and Libya Pressure Oil Prices | ASHARQ AL-AWSAT English Archive 2005 -2017
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Pump jacks are seen at the Lukoil company owned Imilorskoye oil field, as the sun sets, outside the West Siberian city of Kogalym, Russia, in this January 25, 2016 file photo. REUTERS/Sergei Karpukhin/Files

Cairo – For the fourth consecutive session, oil prices continue to fall reaching $48 a barrel. Oil prices fell this low because of Iran’s rejection to limit oil production, Libya’s increased production of crude oil, and doubts about reaching an agreement in the next meeting of The Organization of the Petroleum Exporting Countries (OPEC).

The actual increase of oil production is 1.5 million barrel per day, after excluding Canada’s production due to forest fires and political crises in Nigeria and Venezuela that affected both countries’ productions. Crude oil is expected to increase if U.S. companies increased the number of drills for shale oil.

Investors expressed their fears of oversupply during the last four sessions especially after Iran continued to reject limiting oil production. Iran’s Deputy Oil Minister Rokneddin Javadi declared on Sunday that the country’s crude export capacity will reach 2.2 million barrels by mid of summer.

Therefore, all hopes of reaching an agreement in the upcoming OPEC meeting are dissipated. OPEC next session will be held in Vienna, Austria on June 2nd.

Meanwhile, it seems that Libya will again be a key player as the Libyan Government of National Accord has been formed, in addition to supporting Libya’s National Oil Corporation which has also led to the increased number of production reaching 300 thousand barrels per day.

Libya’s National Oil Corporation spokesperson Mohammed al-Harari said that production could hit between 350 and 360 thousand barrels depending on the oil fields and availability of electricity.

Russia, on the other hand, had set a new record in exporting oil to China, overcoming Saudi Arabia. Customs records showed on Monday, that for the second consecutive month, Russia became the largest crude oil exporter to China, exceeding Saudi Arabia’s exports in April. China’s imports from Russia increased by 52.4% during April to reach 1.17 million barrel per day. Whereas, Saudi Arabia’s imports decreased by 21.8% reaching 1 million barrel per day.

China’s imports from Iran decreased 5.1% to reach 176 barrels per day in comparison to 830 barrels in March. Consequently, Iraq’s exports to China increased to reach 837 barrels per day.

Analysts at Stanley Morgan Bank revealed that oil discoveries in 2015 fell to the lowest levels since 1952 which could create a gap in meeting the demands in the future. Rystad Energy, for oil and gas consulting services, stated that oil and gas production was about 2.8 billion barrels outside U.S. last year, which is equivalent to world consumption in one month. Stanley Morgan added that this reduced amount of production forced budget cuts on companies like ExxonMobil and Royal Dutch Shell, especially drilling budgets.

Stanley Morgan stated that despite increased spending on drilling, new discoveries were few like Johan Sverdrup oil field off the Norwegian coast and the large gas field Zohr discovered by Eni on the coast of Egypt on the Mediterranean Sea.