Vitol, the world’s largest oil trader, has predicted that the price of crude will at the most waver around the $60 a barrel level next year, in part because of Libyan production, reported Reuters.
Ian Taylor, the chief executive of Vitol, said his company forecast global oil demand growth in 2016 to reach around 1.35 m b/d, slowing from this year’s strong expected growth of 1.7 m b/d.
There was also declining demand caused by the global economic slowdown and the question of Iranian production returning to pre-sanction levels.
“Can the market make room for (Iran)? Probably yes, but I’m not sure the market can make room for that and a doubling or tripling of Libyan production, which is my other big worry,” Taylor said.
“The Libyans could easily get back 300,000 or 400,000 b/d. If you have 500,000 from Iran and 400,000 from Libya and you lose 1 m barrels from the Americans, you’re back to where you started, which is why I don’t see the market moving hugely.”
According to Rigzone, the real risk to the oil market balance is that the void left by shuttered US shale capacity could be quickly filled by Iran and Libya.
The US is currently producing around 400,000 b/d, far below the original 1.6 m b/d before 2011.
“There will be a battle for market share, particularly in Asia and a little bit in the Mediterranean”, Taylor added.