June 3, 2022
Introduction:
Read more here: https://www.eurasiareview.com/03062022 ... l-supply/(Eurasia Review) The US welcomed the decision by OPEC+ nations to increase oil supplies, and recognized the role of Saudi Arabia “in achieving this consensus amongst the group members,” the White House’s press secretary said on Thursday.
“We recognize the role of Saudi Arabia as the chair of OPEC+ and its largest producer in achieving this consensus amongst the group members. We also recognize efforts and positive contributions of UAE, Kuwait, and Iraq,” Karine Jean-Pierre said.
The OPEC oil cartel and allied producing countries including Russia will raise production by 648,000 barrels per day in July and August.
“We welcome the important decision from OPEC+ today to increase supply in July and August based on new market conditions. This announcement brings forward the monthly production increase that was previously planned to take place in September,” Jean-Pierre added.
She said the US will continue to use all tools at its disposal to address energy price pressures.
Extract:
Source: https://www.bloomberg.com/news/articles ... ing-months(Bloomberg) The modest supply boost -- amounting to just 0.4% of global demand over July and August -- may ease tight markets. But it leaves unanswered the question of whether the US can turn Saudi Arabia into an ally in its campaign to economically isolate Russia.
“The frost is melting in Saudi-US diplomatic relations, but it will take more progress before full normalization,” said Bill Farren-Price, a director at Enverus Intelligence Research. “Whether the US will be able to drive a wedge between Riyadh and Moscow is a bigger challenge.”
Before Thursday’s OPEC+ meeting, oil had fallen on reports that Saudi Arabia and other members were prepared to fill the gap in the market created by Western sanctions on Russian oil, or even remove the country from the OPEC+ quota system altogether. Russia’s output has already fallen by about 1 million barrels a day since the start of the war and may drop further after the European Union agreed further sanctions on its oil.
The policy shift eventually agreed upon by the Organization of Petroleum Exporting Countries and its allies was far less dramatic. The group approved oil-production hikes of 648,000 barrels a day for July and August, about 50% larger than the increases seen in recent months. Moscow gave the plan its full backing and talks were concluded in just 11 minutes, delegates said, asking not to be named because the information was private
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Opening the taps even just a little wider is still a turnaround for Saudi Arabia. The kingdom doggedly stuck to the OPEC+ plan for gradual monthly supply increases even after Russia’s invasion of Ukraine upended global markets and sent energy prices soaring. Last week, the Saudi foreign minister said there was nothing more the country could do to tame oil markets, and even suggested there was no shortfall of crude.
Conclusion:
Source: https://www.politico.com/news/2022/06/0 ... p-00036694(Politico) OPEC’s announcement had little immediate effect on oil markets. Prices for global benchmark Brent crude were around $116 a barrel, down less than a percent after the announcement.
Prices for U.S. benchmark crude WTI were at $115 a barrel Tuesday, up from $76 a the start of the year. Fuel demand from more people returning to work, school and vacation travel has outstripped the output from refineries that had slowed or stopped production completely during the pandemic. Russia’s invasion of Ukraine also added pressure to prices as traders shunned Russian crude.
Saudi Arabia may have agreed to the increased output as an overture to Biden ahead of a possible meeting, which has generated its own tensions in the United States. But it could also signal that OPEC is worried that high prices are starting to lead to long-term shift away from oil as drivers look to switch to electric vehicles or high prices cause another downturn in the global economy, analysts at ClearView Energy said in an analyst note.
“We would suggest, more fundamentally, that OPEC may be looking out for its own interests: high oil prices could bring demand destruction and push import-reliant economies into recession,” the analyst note read.