Kuwait Sees Oil Glut of Up to Five Years on Increasing Supply

  • Iraq, Iran increasing production; Libyan output can return
  • Prices may only rise on geopolitical disruptions, supply cuts

Oil markets will continue to be oversupplied for as long as five years as producers in the Middle East ramp up output, according to Mohammed Al-Shatti, Kuwait’s representative to the Organization of Petroleum Exporting Countries.

Iraq pumped a record 4.4 million barrels a day in June, according to data compiled by Bloomberg. Libyan output, which has declined by more than half due to conflict, can return "at any moment," Al-Shatti said in an interview Saturday in Doha. Iran has the capacity to boost exports by 500,000 barrels a day within one week of sanctions being lifted and by 1 million a day within six months, Roknoddin Javadi, managing director of state-run National Iranian Oil Co., said last month.

"Lower prices will continue until the glut in the market ends," Al-Shatti said. "Many countries are expected to increase production. Iranian crude is expected to return and that means an increase in production."

Demand isn’t expected to absorb the extra capacity and it will take shifts in supply to affect prices, he said. Al-Shatti said geopolitical disruptions or reduced future output because of the 30 percent fall in capital expenditure by oil companies could cause an increase.

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