The experts tell CNBC that the supply of oil could be easily endangered by the geopolitical risks, and such a distraction could cause oil process to skyrocket. The global strategist and chief investment officer of European equity at Allianz Global Investors Neil Dwane warned that oil production supply is looking susceptible all around the world.
He told CNBC’s Squawk Box on Friday that, “Venezuela’s 2 million barrels of oil a day could literally go any day. Mexico looks poor. Azerbaijan’s in trouble. China’s own production is collapsing rapidly.”
“One only has to have one mistake and the only thing you’ll be talking about all morning is oil at $120.”
Dwane further said that the geopolitical risks could take the oil prices to the sky top as many oil producing states are fragile, and the oil prices are currently too low. The fresh drills are needed in the future.
OPEC specialist at S&P Global Platts Herman Wang, also agreed that there is the noteworthy geopolitical risk to oil supply.
He told CNBC’s Squawk Box on Friday “There are plausible scenarios where you could see, perhaps not $120 a barrel, but an elevated oil price, say $70 to $80 on some of these geopolitical and some of the supply concerns. Venezuela certainly is a mess right now.”
Without these geopolitical concerns, OPEC must face the “million barrel question” if it ever hopes to rebalance the global oil market.
According to the reports, the U.S. crude oil stockpiles did fall sharply by 6.3 million barrels in the week to June 30. And these stockpiles will in coming month’s falls fastly. Wang said “U.S. production is already half a million barrels above where it was when their production cut deal from OPEC started. You’ve Libya and Nigeria, they’re militancy seems to be claiming there now.”
“Their production is up about 400,000 bpd combined above where it was from October levels. So you combine U.S. with Libya and Nigeria, that’s almost a million barrels per day, undoing more than half of this combined 1.8 million bpd OPEC and non-OPEC production cut.”
So, the need of time is for the fresh drills otherwise the oil prices will shake the whole world markets.