Because OPEC + renounces the clash with Biden over oil
OPEC + has decided to maintain the expected levels of increase in oil supply: in January it will increase production by 400 thousand barrels per day. Clash with Biden avoided
Opec +, the group that brings together some of the major oil exporters, yesterday decided to continue with the plan to gradually increase the supply of barrels, without changing the volumes agreed long ago. For the month of January, therefore, its total output will increase by another 400 thousand barrels per day.
THE BIDEN MOVE AND THE OMICRON VARIANT
There was a lot of attention on the OPEC + meeting which ended on December 2: the group is in fact limiting the availability of oil on the markets, driving up prices and attracting attacks from consuming countries – the United States, above all -, worried that the cost high fuel levels may cause inflation to rise even further and damage the economic recovery from the pandemic.
The United States recently announced joint action – together with China, India, Japan, South Korea and the United Kingdom – to free barrels of oil from strategic reserves and encourage prices to fall. Beyond the immediate effects, the move (contained in the volumes) was part of a larger negotiation plan with OPEC + members.
In the end, the organization, despite the release of crude oil from reserves and the risks associated with the spread of the omicron variant of the coronavirus, decided not to revise the levels of additional supply.
NO CLASH WITH WASHINGTON
A few days ago the Wall Street Journal had written , on the basis of information received from anonymous sources, that Saudi Arabia and Russia – the two nations at the head of OPEC + – were considering the possibility of suspending the increase in the supply of Petroleum.
Instead, it seems that in the end the group – also made up of American allies, such as Saudi Arabia, although relations today are a bit strained – decided to avoid confrontation with Washington. There is also the difficulty of finding a common position for all members of the organization: the United Arab Emirates, another influential member of the cartel, were, for example, opposed to a slowdown in output.
NEXT MEETING
OPEC + will meet again on 3-4 January. But it could call a summit even earlier, in the event that the trend of the oil market requires action. For the moment, Russian Deputy Prime Minister Alexander Novak, longtime Energy Minister, said, the situation is balancing and the demand for crude oil is slowly growing.
HOW OIL GOES
After the organization's announcement of an increase in supply by 400,000 barrels a day for January, Brent oil (the international reference contract) lost over 1 dollar; then it recovered slightly, reaching around 70 dollars a barrel. That's far less than the three-year highs of over $ 85 recorded in October, but it's still 30 percent higher than in early 2021.
THE ESTIMATE OF JPMORGAN
Financial services firm JPMorgan estimates that oil prices will hit $ 125 per barrel next year and reach $ 150 in 2023 due to the decline in OPEC + production capacity.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/opec-offerta-petrolio-gennaio/ on Fri, 03 Dec 2021 09:53:16 +0000.