Oil market riddled with 'unknowns', says Vitol executive

There are several unknowns in the oil market at the moment making it harder to predict the direction of the crude price, according to a senior executive at multinational energy and commodity trading company Vitol.

Speaking at the Gulf Intelligence Energy Markets Forum in Fujairah, UAE, on Thursday, Steven Brann, senior investment manager at the trading outfit said, “We have China’s economy in transition; the riddle of Iraqi production, possibility of additional Iranian barrels coming on to the market (and perhaps already here), US shale proving more resilient, and how OPEC would respond over the coming months in an era of lower oil prices.”

Brent has shed over 50% of its value since July 2014, and has seen extreme volatility over the last four weeks lurking either side of the $50 per barrel level.

Brann said, “Given the circumstances, despite being an oil trading house even we are wary of predicting the oil price. More so, as OPEC has changed its stance of protecting the oil price to protecting its own market share.”

However, the Vitol executive said OPEC’s stance was a “sensible” one. “Question everyone is asking - will they blink and cut production? In a market riddled with unknowns, to me it seems to be a sensible policy to maintain market share.”