Middle East, Sudan Turmoil Cuts into World Oil Supply
LONDON, July 30 (Reuters) - The fall of Middle East tyrannies and renewed conflict there have squeezed oil supply, returning the region's politics to the fore as an energy worry for the world.
Oil outages in Iraq, South Sudan, Libya and Iran are combining to help keep oil prices well above $100 a barrel, partly countering the rise in U.S. shale oil supply and concern about the strength of Chinese demand.
"Geopolitics are firmly back on the radar," said Soozhana Choi, analyst at Deutsche Bank. "This is occurring against a backdrop of North Sea field maintenance and strong refinery demand for crude oil."
Disruptions in the Middle East and North Africa arise as supply from the North Sea is undergoing a heavier-than-usual spell of summer maintenance and as the flow of Russian Urals crude to Europe has fallen with more heading to China, further tightening supply at a time of higher seasonal demand for crude.
Supply losses are over 700,000 barrels per day (bpd) according to Reuters calculations and industry sources and could reach 1 million bpd - 1.1 percent of world output - if South Sudan goes ahead with a threatened shutdown of its production.
"Production is currently underperforming and significantly so," said David Hufton of oil brokers PVM. "Being an oil bear is a tough existence in the short-term trading world."
The supply losses are boosting prices. Benchmark Brent crude futures traded just above $107 a barrel on Tuesday, up from its 2013 low of $96.75 reached in April.
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