When crude oil decidedly broke its recent support level, and slid right back into the $40-handle range which served as a springboard for the dead crude oil bounce earlier this year, many blamed the imminent surge of Iran crude oil deliveries for as a the downside catalyst. The reality, however, is that a long time will pass before significant Iran crude oil may flood developed markets, and yet even without Iran crude oil, the market has recently seen a surge in supply and production over the past few months – it is this sudden crude oil glut that has been the true driver of most recent slide in prices.
But who is the culprit? We present the answer on the following several charts showing crude oil exports from both OPEC and non-OPEC oil producing countries. Note that Iran has gone exactly nowhere – it is “others” who are to blame for the most recent downturn in crude oil prices.
What about non-OPEC production: despite speculation that the US production is peaking (and Saudi Arabia is winning), US production is virtually at its all time highs.
So with everyone overproducing, is global crude oil demand rising? Nope. In fact, while everyone knows that the US has just a modest oil “glut”, this has moderated in recent months, but as the highlighted chart the crude oil glut across the entire OECD region has never been greater.
End result? This:
Absent either a dramatic slowdown in crude oil production, mostly by Saudi and Iraq, (where we hope the marginal producer is not ISIS) or a just as dramatic surge in oil consumption (now that the world is rapidly running out of places to store drilled oil) the price is going lower.
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