The big question this week is whether supply disruptions will make a dent in the oil market’s ever-present global supply glut. The answers in a nutshell: disruptions in Nigeria, Canada, and Libya are likely transient, whereas Venezuelan production poses a long-term problem. U.S. production will continue its slow decline, even if oil prices reach $50. On the other side, Iranian production will continue to increase—slowly—and Saudi Arabia will increase production rapidly. As for where the price of oil is headed – your guess is as good as mine.

Nigeria

The Nigerian National Petroleum Company generally produces about 2.5 mbpd, making it Africa’s largest oil producer. However, recent acts of terrorism and sabotage have cut this number to 1.65 mbpd. Both Shell and Chevron have suspended oil production in areas affected by this activity.

Insurgencies targeting Nigeria’s oil production are not a new phenomenon. In fact, Nigeria’s previous president, Jonathan Goodluck, pioneered a program in 2009 that provided former oil terrorists in the Niger Delta region with monthly stipends to keep them from attacking oil facilities. This seemed to keep a lid on violence in the region. Nigeria’s new president, Muhammadu Buhair, recently reduced the program’s funding by 70% and would like to cancel it entirely within two years.

The Niger Delta Avengers (who perpetrated the most recent attack on an offshore oil platform) claim to be fighting for independence for the Niger Delta and also demand a larger share of oil profits. If Nigeria can clamp down on this latest wave of attacks (which it appears to be doing in a recent series of arrests) and placate the militant separatists, then the country should be able to recover production in the short-term. The fact that the issues are political rather than structural suggests that oil investment and production should not suffer for long.