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Oil Supply Disruptions Highest In Five Years

By on 10 Jun 2016 in news, notable posts

Niger Delta Pipeline Bombing

(oilprice.com) The disruptions in global oil supplies are at their highest level since 2011. That comes from an updated assessment from the EIA, which shows total disruptions in oil production at more than 3.6 million barrels per day in May (mb/d), the highest monthly total since the EIA began tracking the data in January 2011. The outages hit major oil supplies across the world. At its worst, Canada saw more than 1 million barrels per day knocked offline because of the wildfires near Fort McMurray. That production is starting to come back online, however, and was always thought to be a temporary disruption.

But other supply outages could be more sustained. Although precise data is hard to come by, Nigeria might currently have more than 1 mb/d offline because of attacks from the Niger Delta Avengers on key platforms, pipelines, and oil wells. The Avengers have threatened to take oil production in Nigeria down to “zero” in an effort to have their demands for sovereignty met. Nigeria’s oil production has plunged from 2.2 mb/d in 2015 down to somewhere around 1 mb/d today. The EIA pegged the country’s production at about 1.4 mb/d in May, but that is probably too high for June given that several more attacks have been carried out since then.

The troubling thing for Nigeria is that these outages are likely to persist for some time. The Niger Delta Avengers have rejected talks with the government and continue to carry out attacks. The oil companies operating in the region – Shell, Eni, Chevron – will find it difficult to even conduct repairs on damaged infrastructure. The Avengers have promised to keep up their attacks, so it is entirely possible that the disruptions will continue to climb. A handful of other smaller outages have hit some fellow OPEC producers. Iraq suffered bad weather and power outages in May, which disrupted an additional 50,000 barrels per day of oil exports. Libya also saw 50,000 barrels per day knocked offline in May because of struggle for the control of the al-Hariga oil export terminal.

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