Global oil supply outages spike in July

Global unplanned supply outages are anticipated to surpass 4 million b/d in July for the first time since mid-2016. The increase has been triggered by trouble in Libya, a power outage at the Syncrude oil sands plant in Canada, and continued production decline in Venezuela. While the outage in Canada is only expected to impact the near term, and Nigerian losses are forecast to return to more normal levels in August, we expect further losses from Iran and Venezuela. The outages come at a pivotal point for the oil market, coinciding with OPEC’s recent decision to bring more supply back into the market. OPEC agreed to reduce compliance to the agreed accord from 152% in May to 100% from July – effectively bringing back ~1 million b/d of supply into the market. However, within the overall context of the global oil market, we continue to expect a year-on-year gain in oil supply of 2.2 million b/d in 2018 as US gains continue along with contributions from several other non-OPEC producers