shine trader limited reports:
With the continuous performance of the global energy crisis, an “oil tug of war” is in full swing.
OPEC + decided not to increase production in November
On Monday, October 4, against the background of the current tight global energy supply, which greatly boosted oil demand, the OPEC + oil producing countries alliance led by Saudi Arabia and Russia said that it would increase production by 400000 barrels per day per month as originally planned in November, that is, it would not increase production in excess to alleviate the supply shortage.
After the conclusion of the 21st OPEC + ministerial conference, it announced that it would adhere to the output adjustment plan approved by the 19th OPEC + Ministerial Conference on July 18 this year, and the total output of the alliance continued to increase by 400000 barrels / day in November this year.
Meanwhile, the end date of the overall OPEC + production reduction plan will still be postponed from April to December, allowing some member states such as Saudi Arabia and Russia to “compensate for production increase”.
International oil prices rose in response, rising by more than 3% on an average day. WTI once rose above $78, the highest in nearly seven years since November 2014.
There are also sources saying that OPEC+ is afraid that there will be fourth waves of COVID-19 in the future, and that no member states want to make a big move now.
After the meeting, novel coronavirus pneumonia, Novak, vice premier of the Russian energy minister, said that the market conditions improved but there was still a risk during the new crown pneumonia outbreak.
The 22nd OPEC + ministerial meeting will be held on November 4, when the output policy in December will be decided.
White House pressure on OPEC to increase production
A senior aide to US President Joe Biden raised the issue of oil prices in talks with Saudi leaders last week, Reuters reported.
On September 28 EST, Biden’s national security adviser Jake Sullivan met with Saudi Crown Prince Mohammed bin Salman in Saudi Arabia.
White House press secretary Jen psaki said that the oil issue was “worthy of attention” and put on the agenda.
Another White House spokesman said:
At a meeting earlier this week, the national security adviser and his team reiterated that it is imperative to create conditions to support the global economic recovery.
The United States will continue to discuss the importance of competitive markets in pricing with international partners, including OPEC +, and take more measures to support economic recovery.
The Biden administration has previously said that these economic conditions include more oil production to prevent the rise of energy prices and help the economy recover from the epidemic.
This is not the first time the Biden administration has put pressure on the alliance of oil producing countries.
After the 19th OPEC + ministerial meeting on July 18, the White House said that in the critical period of global economic recovery, the agreement on oil production reached by OPEC + in July was far from enough.
A senior White House official pointed out that President Biden recognizes that gasoline prices are putting pressure on the U.S. household budget. He hopes his government can take all means to help reduce oil prices.
Driven by the White House, the US government has always stressed the need to combat the impact of climate change.
However, rising inflation may undermine the economic recovery, which has been the main focus of President Biden’s term.
OPEC: it’s not time to increase production
Saudi Crown Prince Salman believes that despite the soaring prices of energy and other commodities, the increase in oil prices in recent months is not enough to justify increasing production.
If the epidemic spreads again, the relevant blockade measures will reduce oil demand again this winter.
Christyan Malek, equity analyst at JPMorgan Chase, also pointed out:
Oil prices are not rising as fast as natural gas or coal, so there is less urgency to take action now.
Another disadvantage is that in the rush to reduce carbon emissions in large industrial economies, fossil fuel producers are marginalized, although they still provide the vast majority of energy supply.
Another view is that insufficient investment in the oil industry may lead to a more serious crisis than today’s natural gas. OPEC hopes that policymakers will take the potential oil super cycle seriously, even if they are reducing fossil fuel emissions.
In response to the pressure from the White House, OPEC representatives previously said that they did not think it necessary to speed up the restoration of oil supply. Saudi officials said they were confused by the Biden administration’s position: on the one hand, they sought to reduce oil consumption, on the other hand, they asked OPEC to increase oil production.
A Saudi official said:
(Biden) aren’t you talking about the impact of climate change and oil on the environment? Why ask for more now?
Other OPEC representatives also expressed their opposition. They believe that the epidemic is not over and the world is not out of trouble.
At the same time, some representatives warned that low oil prices could hinder investment in oil and gas projects, which in turn could lead to greater future price surges.
article links：OPEC "didn't listen" and oil prices continued to rise
Reprint indicated source：Shine Trader Limited Live information