Norway has prepared to deliver a powerful blow to oil prices by filling the market with raw materials from the giant Johan Sverdrup field in the North Sea in an already oversupplied environment. This is written by Bloomberg.
Equinor started producing raw materials at the field in November 2019 and reached 350,000 barrels per day by December. It was expected that in the summer of 2020, the field will produce 440 thousand barrels per day, and after 2022 — 660 thousand barrels. However, on Monday, March 30, it became known that Equinor in early May 2020 will reach the level of 470 thousand barrels per day — that is, 30 thousand barrels more than the target.
An increase in supply will complicate the situation in the oil market. As Bloomberg wrote earlier, global consumption of raw materials is usually kept at the level of 100 million barrels per day. However, against the backdrop of the oil crisis, it has declined by about 25 percent, analysts say. Thus, the market has already formed an oversupply of 25 million barrels per day.
At the same time, the owners of the Norwegian field are likely to continue active production on it. Against the backdrop of a new global economic crisis and falling markets, Johan Sverdrup is becoming a good source of income for Equinor and other companies due to the low cost of production. As the Agency explains, although a barrel of benchmark Brent oil has fallen to below $ 23, which is the lowest since November 2002, the Johan Sverdrup field can make a profit at the price of raw materials below $ 20.