Temporary Outages Helping Balance Oil Markets

Brent oil prices surged to an average of $45 per barrel (pb) in Q2 2016, up 35 percent quarter-on-quarter, due to a combination of developments. Firstly, oil outages from Canada and Nigeria resulted in at least 1.5 mbpd being temporarily unavailable to global oil markets. Secondly, slowing US shale oil output resulted in year-on-year growth in US crude oil imports being consistently positive for the first time in six years. ‘Brexit had a relatively modest impact on oil markets, with Brent slipping back slightly below $50pb immediately following the UKs decision to leave the European Union. The effects over the longer term are less clear, with a worse-case scenario being a global contagion effect resulting in increased volatility in global oil and financial markets.