Officials from OPEC, Russia and other oil-producing countries will arrive at the OPEC Plus conference on Thursday, which may be at a critical crossroads as the gradual recovery of production from the depths of the pandemic is nearly complete. ..
OPEC Plus producers are likely to paraphrase last month’s decision to increase production by 648,000 barrels per day in August. As a result, the Group’s total production target will be approximately 44 million barrels per day, almost at pre-pandemic levels.
Reaching that milestone may give other producers, such as OPEC’s de facto leaders Saudi Arabia and the United Arab Emirates, the opportunity to rethink OPEC Plus’s methods. It operates, including reviewing the ambitious assignments of many members who are far below their goals for the Group’s achievements. For example, the International Energy Agency estimates that the group will only achieve about half. Increases set in July and August.
Saudi Arabia and others may also wonder if they would like to continue to work closely with Russia, the co-leader of OPEC Plus, whose oil supply is subject to western sanctions for its invasion of Ukraine. OPEC members, who claim to be politically neutral, are clearly aware of the decline in Russia’s oil production.
And Saudi Arabia has recently suggested the possibility of thawing in relation to the United States, the world’s largest oil producer. Washington is putting pressure on Saudi Arabia to increase its supply and is working to lower pump prices for tough drivers in the United States and other countries.
These complaints were ignored until the last OPEC Plus meeting, and the group announced that it would increase production by 648,000 barrels per day. This was about 50% more movement than promised last month and was primarily considered a well-meaning gesture. Biden administration. Later that day, officials announced that Mr Biden would visit Saudi Arabia. This is a trip currently scheduled for mid-July.
The conference will be held as the price of Brent crude, an international benchmark, has skyrocketed by more than 50% to reach $ 116 a barrel. This year, sanctions against Russia have raised concerns about supply shortages in already tense markets.
There is logic to argue that Moscow’s leadership role in OPEC Plus should be downgraded. As Western sanctions become more stringent, Russia will probably weaken as an energy superpower, leaving less room for maneuvering to increase or decrease production to control the oil market.
Energy historian Daniel Yergin said in an interview last month that “unless Russia’s production is declining, the entire OPEC Plus system will not work.”
But so far, Saudi Arabia and Emiratis seem to tend to shrug such discussions. Saudi Arabia has spent years trying to strengthen OPEC’s declining influence by involving other energy players like Russia and Kazakhstan.
And most of the signs are that the Saudis are now reluctant to abandon Moscow. Russia may have gained a position close to the Pariah state in the western eye due to the war in Ukraine, but from a Saudi Arabian perspective, it is one of the two largest oil exporters with Saudi Arabia.
In that view, Russia is a more valuable partner than OPEC member countries such as Iran, Libya, Nigeria and Venezuela. The oil industry in these countries is also plagued by sanctions and other issues.
Russia, which has succeeded in finding oil markets in countries such as China and India, also shows that Russia is still strong and predicts that the country’s production will decline faster than ever. Confused people.
“The big question in the future is whether Russia will continue to act as co-pilot with Saudi Arabia. The answer is probably yes,” said Saudi Arabia in a recently published book on Saudi Arabia and OPEC, “Oil Leaders.” Ibrahim Almhannah, a former longtime adviser to the Minister of Energy, wrote.
In an interview, Alm Hanna said that “good results” in the last six years have come from cooperation with Russia. “Therefore, it will probably continue in the future.”
Still, Saudi Arabia will probably want to offer something when President Biden visits. If Saudis appear awkward, they risk unwelcome American behavior.
Washington is fully demonstrating its willingness to intervene in the oil market. For example, sanctions on Iran are preventing the sale of large amounts of oil that Tehran can produce or already store.
At this week’s Group 7 meeting, the Biden administration proposed capping Russia’s oil prices. The purpose of the unembodied plan is to reject President Vladimir Putin’s war funds and ease consumer prices.
OPEC officials have not publicly commented on this proposal, but perhaps see the idea of price caps as a source of new uncertainty that could further complicate the task of managing an already volatile energy market. Probably.
Analysts say Saudis may agree to increase production in the coming months, but they will probably proceed cautiously. They are manipulating their desire to appease Washington with other considerations, including the embarkation of other producers, especially Russia, until 2023. Hard cell in OPEC.
There are various estimates of the amount of additional oil OPEC Plus can produce, but most analysts agree that only Saudi Arabia and a few other countries can add more oil.
Analysts say panic can occur if a trader determines that he has reached the bottom of the barrel. This can happen if the Saudis and others make big promises and find that they cannot fulfill them.
Richard Bronze, Head of Geopolitics at Research Company Energy Aspect, said:
