There is excitement this morning at the four year high in oil price at $81 a barrel. They put it down to Iran reduction because of President Trump’s sanctions + Bakken Shale problems (shale sweet spots are running out triggering feverish competition over concessions in the US) + spare capacity fears (spare capacity of mid east countries is is only 2-4 million b/d meaning that unexpected supply interruptions are more difficult to cope with).
In Iraq this triggered renewed discussion this morning of the fact that Kirkuk’s oil is “stranded” meaning 270,00 to 300,000 barrels a day “wasted capacity due to unavailability of pipelines”.
The only prospect of a reduction in demand also, ironically, is a consequence of President Trump’s actions – as a consequence of the possibility of reduced Chinese demand in the aftermath of the Sino-American trade war. But all the indications are that the price will continue to rise, helped by the OPEC decision not to increase production at their meeting in Algeria yesterday.