The world’s largest energy trader says oil prices are set to rally further as OPEC output cuts and American sanctions on Iran and Venezuela cause a “shortage” of the low-quality heavy crudes refiners rely on.
“From here there’s probably the potential to be a little bit higher,” said Russell Hardy, chief executive officer of Vitol Group. “Oil supply is going to be pretty tight until the third quarter.”
As the who’s who of the oil industry descend on London for the annual International Petroleum Week of conferences, meetings and cocktail parties, traders are dealing with an international crude market that’s increasingly divided.
Texas and other shale-rich states are spewing a gusher of high-quality crude — light-sweet in the industry parlance — feeding a growing glut that’s bending the global oil industry out of shape. Refiners who invested billions to turn a profit from processing cheap low-quality crude are paying unheard of premiums to find the heavy-sour grades they need.
“You have a squeeze on heavy supply probably for the next six months,” Hardy said in a Bloomberg TV interview. “The OPEC decision has meant there’s less available, the Iranian situation has meant there’s less available, and the Venezuelan situation now is adding to that.”..read more
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