NEW YORK (Commodity Online): In 2011, when the Libyan crisis broke out, oil prices started to climb. Libya was a major producer of oil, pumping around 1.4 million barrels per day (bpd). With the Libyan crisis now resolved, production is coming back to normal levels but tensions in the oil market remain thanks to two countries- Iran and South Sudan.
While much has been written about Iran and Strait of Hormuz, very little has been written about South Sudan and its oil supplies. With the country having a disagreement with its neighbour Sudan, South Sudan has closed down its export.
South Sudan pumps almost 260,000 bpd of oil and supplies mainly to Asian countries who seek its low sulphur-high wax crude. With the loss of South Sudan oil, Asian importers will have to compensate the supplies by sourcing it from somewhere else, thus pushing up demand and lowering the global pool of available oil.
And if Iran decide to immediately stop all oil exports to the EU, the Eurozone will find it very tough to secure an alternate supplier- especially with high paying Asian nations as its competitor. This will decidedly push up price of oil.
The International Energy Agency (IEA) estimates that South Sudan will not reach its pre-shutdown level atleast till Q4, 2012.
