Wildfires in Canada and pipeline bombings in Nigeria in May disrupted more of the world’s oil production than during any month in at least half a decade, pushing fuel prices higher, the Energy Information Administration says.
As Fuelfix.com reports, the crude supply outages around the world reached 3.6 million barrels a day last month—more than twice the size of the global oil glut that caused oil prices to plummet from above $100 a barrel in June 2014 to as low as $26 a barrel four months ago.
“There are always disruptions somewhere along the supply chain,” says Bernard Weinstein, an adjunct professor of business economics at Southern Methodist University. “But we had a confluence of circumstances in May. These are some temporary factors.”
Crude prices have nearly doubled since hitting a 13-year low in February in part because of the supply outages but also because gasoline demand in the U.S. is rising as consumers, spurred by cheap prices at the pump, buy more vehicles. Crude demand in Asia also is firming up.
“There’s all this talk about the slowdown in China, but people are still driving cars and India is having a record boom,” Weinstein says.
Still, new government data show the outages could be affecting U.S. oil production. The nation’s output rose by 10,000 barrels a day in the week ended June 3, according to the EIA. But weekly production data is widely considered unreliable, so it’s still unclear if domestic drillers are pumping more crude or remaining cautious about the recent rise in prices to above $50 a barrel.
