The price that some of world's biggest oil producers charge for their oil fell last year for the first time since 2010, the Organization of the Petroleum Exporting Countries said Thursday.
The price that some of world's biggest oil producers charge for their
oil fell last year for the first time since 2010, the Organization of the
Petroleum Exporting Countries said Thursday.
Surging oil production in the
U.S.
as a
result of the country's shale oil bonanza and sluggish global demand growth
helped ease oil prices last year, despite political upheaval in several Middle
Eastern and North African countries that threatened stable oil supply.
The value of OPEC's benchmark reference basket fell 3% last year compared with
2012, when it rose to a record $109.45 a barrel, the producer group said in its
monthly oil market report. The decline broke a three-year streak of consecutive
year-on-year gains, but was in line with broader moves in the market.
This year, the cartel, whose members are heavily reliant on oil revenues, may
face deeper price pressure as demand growth is expected to remain weak and
supply additions elsewhere are already dampening appetite for OPEC barrels.
OPEC, a group of some of the world's largest oil producers, estimated that
demand for its oil fell by half a million barrels a day last year to 29.9
million barrels a day and expects it to decline by a further 400,000 barrels a
day in 2014.
The situation raises a difficult question for OPEC over whether the group
should curtail its own production to maintain prices. The prospect of
significant increases in supply could make this issue pressing later in the
year.
Political turmoil in
Libya
saw
the country's oil exports dwindle at the end of last year, but some export
terminal reopened in January.
Iraq
is
also hoping to achieve and ambitious increase in oil exports in 2014, and a
thaw in relations between
Iran
and
Western powers could see Iranian barrels returning to the market as early as
the second half of the year.
In a note published Wednesday, Bank of America Merrill Lynch said that if
supply from both
Libya
and
Iran
were
to normalize at the same time it "could lead to meaningful downside
pressure on prices."
Indeed, even if
Saudi Arabia
were
to reduce its output substantially this year, Merrill Lynch said that a
positive supply shock of 1.5 million barrels a day of oil from
Libya
and
Iran
could
still push the price of Brent crude down to average $95 a barrel this year, compared
with the bank's current price forecast of $105 a barrel.
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