OPEC won't react to small, short-lived oil supply disruptions

OPEC is monitoring unrest in Iran as well as Venezuela’s economic crisis, but the group will only boost output if there are significant and sustained production disruptions from those countries, a senior OPEC source from a major Middle Eastern oil producer said, Reuters reported.

“Even if there was a supply disruption (from Iran or Venezuela)... OPEC will not raise output,” the senior OPEC source said. “OPEC’s policy is to bring inventories down to their normal levels and will stay the course, unless the disruption in supply of something like 1,000,000 barrels per day persists for more than a month, and causes shortages of crude supply to consumers.”

The senior OPEC source also said the oil market was on its way to being re-balanced, but so far global oil inventories remained above their five-year average and much more time was needed to drain the oil glut.

“Any change in production limits must be driven by a change in market fundamentals and not just speculations for a short period of time, for OPEC to change the output ceiling,” he said.