Renewed U.S. efforts to curb Iranian output, escalating tensions in Libya, supply outages in Nigeria and the ongoing crisis in Venezuela have created a complex and uncertain outlook for crude.
The week ahead will be another major test, with Iranian sanction waivers officially expiring in early May, and the U.S decision to cancel all concessions raising new questions about how Saudi Arabia and other major producers will respond.
The decision to end the waivers could remove 1.3 million barrels per day of Iranian exports, according to S&P Global Platts. OPEC has about 3.3 million barrels per day of spare production capacity, according to the International Energy Agency, of which about 2.2 million barrels per day is held by Saudi Arabia.While capable of doing so, whether or not Saudi Arabia and the United Arab Emirates are willing to increase supply to make up for the Iranian shortfall remains to be seen.
"If we lost Libya from the market, it would take spare capacity down to very uncomfortable levels and would certainly add a major risk premium to oil," Neil Beveridge, senior oil and gas analyst at Bernstein, told CNBCs "Squawk Box Asia."
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