Last week’s performance of oil was lackluster and directionless despite the US-China trade agreement. Brent tested the $65 per barrel mark several times but was not really able to hold the gains. This is understandable when reading the monthly oil market report of the International Energy Agency (IEA), which predicted a demand growth of 1.2 million barrels per day (bpd) for 2020 and a supply growth of 2.1 million bpd from non-OPEC countries. This supply overhang occurs despite Iranian production falling to 2 million bpd of which only 300,000 bpd were exported in December due to sanctions and Venezuela’s production going from 700,000 bpd to a virtual standstill due to both sanctions and disintegration of the economy. Gone was the temporary geopolitical premium as a result of the killing of the Iranian Gen. Qassem Soleimani by a US drone near Baghdad airport. All of that changed over the weekend when Libyan military commander Khalifa Haftar stopped exports by shutting down a pipeline under his control. This forced the National Oil Corporation, Libya’s national oil company, which is under the control of Prime Minister Fayez Al-Sarraj’s UN-recognized Libyan government, to shut down two major oil fields and declare force majeure. Production is expected to decline by more than 800,000 bpd from 1.2 million bpd. Exports will be expected to be below 100,000 bpd, which according to Bloomberg is the lowest since 2011. Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News" point-of-view
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