A Reuters poll of 28 international energy analysts says that crude oil prices will remain close to $61 a barrel for the remainder of the year due to an ample supply from the Middle East and a resurgence of US shale oil production. OPEC is widely expected to maintain current or possibly even higher production levels for the rest of the year.  Iraq, Saudi Arabia, the Gulf states and Iraq together account for two thirds of OPEC’s crude oil production.

Russia is calling on crude oil producers around the world to refrain from increasing output, Energy Minister Alexander Novak said last week. The Russian economy has been hit hard by lower oil prices which has reduced government revenues substantially.

China’s overall April crude oil imports rose 8.6% year on year to a record 7.4 million barrels per day. This is the first time that China has surpassed the US as the world’s largest importer of crude oil.

The Middle East controls 60% of proven crude oil reserves and with it the keys to the global economy. There are fears that if ISIS captures a major oil field in Iraq, or overwhelms the government, the consequences for energy markets and the world financial system would be potentially catastrophic. According to Daniel Yergin, the energy expert and vice-chairman of IHS, the biggest threat to oil prices is the political chaos that threatens to engulf the Middle East, combined with the West’s reluctance to intervene.  He  believes that the price of a barrel of oil could skyrocket to levels above $100 per barrel if ISIS is allowed to press deeper into Iraq, the second-largest producer in the cartel after Saudi Arabia.

Saudi Arabia’s demand for oil products could increase by up to 20% this summer from last year as soaring temperatures will increase demand for electric power generation. Requirements for fuel oil, the cheapest form of oil used to generate electricity, could climb by up to 20% this year.

The US Energy Department has approved the shipment of liquefied natural gas (LNG) from ports in the state of Alaska to non-free trade markets in Asia.

Automaker Mercedes-Benz is following electric car maker Tesla and plans to enter the energy-storage business. A division of parent company Daimler has been testing battery packs that can power houses, and plans to launch commercially in September. The division has been testing battery packs for “light industrial, commercial, and private” applications, with sizes ranging from 2.5 kWh to 5.9 kWh.

 

with h/t Tom Whipple

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