Yergin's Take | Russell T. Rudy Energy LLC
“World Oil” reports on Daniel Yergin’s comments at the Global Financial Markets Forum in Abu Dhabi recently. Yergin, the author of The Prize, a Pulitzer Prize winning history of the oil industry, is regarded as one of the foremost authorities on energy matters in the world.
Yergin is more optimistic regarding the potential impact of the recent agreement between Russia, Saudi Arabia, Qatar and Venezuela to freeze oil output at January levels. He feels that it could help alleviate the world-wide glut, achieve market equilibrium, and enable prices to recover. He went on to say, “The freeze is a bridge to the autumn, and autumn is when you start to see the market more back in balance. This freeze is the beginning of the process.”
Yergin cautioned that the success of the freeze is contingent on Iraq and Iran signing on. While Iraq has indicated it would participate if other producers did, Iran called the plan “ridiculous”.
Iran seems committed to making up for revenues lost during the period of western-imposed sanctions, and intends to add 1 million barrels of oil per day (bopd) of production this year. However, Yergin feels that any output increases would be between 400,000 and 600,000 bopd. He elaborated, “There is lots of talk about investment in Iran. We think companies are going to be very cautious because of Iranian politics, and Iranian decision making.”
Conversely, U. S. crude inventories have risen to their highest levels in over 80 years as a result of the shale revolution. However, Yergin sees domestic output falling by over 1 million bopd from last April’s levels, and predicts bankruptcies, mergers, and impairments.
To read the article in its entirety, please go to http://www.worldoil.com/news/2016/3/3/yergin-sees-output-freeze-restoring-balance-to-global-oil-market .
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