Article by Adam Becis, Principal Reservoir Engineer
Oil prices have dropped from multi-year highs in October, reflecting the global economic slowdown. Oil prices have been buffeted by the US ban on Iranian oil imports, continued US-China trade arguments and rising US interest rates. The global supply/demand crude balance has shifted again to over-production and markets are predicting that demand growth will be limited by global economic weakness.
Recognising this, OPEC and allied oil-producing nations agreed in December to a cut of 1.2 million barrels per day in oil production for the first six months of 2019. The Brent-WTI spread has continued to hold despite downward pressure from a reduction in Iranian oil in the market on the back of the US ban. This has been due to US crude output staying strong and Permian output continuing to be limited by pipeline export capacity.