Source: Global Times [Global Times Comprehensive Report] Oil is still one of the indispensable energy sources in the world, and its output and prices have an important impact on the global economic trend. Therefore, the "OPEC+" decision to cut production has attracted global atte

Source: Global Times

[Global Times Comprehensive Report] Currently, oil is still one of the indispensable energy sources in the world, and its output and prices have an important impact on the global economic trend. Therefore, the "OPEC+" decision to cut production has attracted global attention, especially when inflation in many countries is on the rise. So, which countries or regions will be hit hard after the "OPEC+" production cut? What will the U.S. government, which hopes that oil prices will fall?

These countries are more affected

Deputy Director and Professor of the American Research Center of Fudan University, told the reporter of " Global Times ": "' OPEC +' production cut will have an impact on two types of countries or regions. One is such as Russia, Saudi Arabia , Kuwait In this way, the member states of OPEC+ can directly increase revenue; the second category is oil importers, which have to bear the consequences of rising energy costs. Especially as the "big oil importer" and many European countries are facing pressure of high inflation, so the "OPEC+" production cuts will have a greater impact on these countries."

For Europe, which is about to "winter" in the energy crisis, , the rise in oil prices is undoubtedly a worse injury. "It's very simple. The rise in oil prices also means that gasoline prices will rise, which will directly affect people's lives." said Manuel Frandel, an expert at the RWI Economic Research Institute in Essen, Germany.

In fact, "OPEC+" production cuts have caused concerns among some European people. Orel, the head of a German company specializing in hydropower treatment, told the Global Times reporter: "Many small and medium-sized companies are very sensitive to gasoline prices because they need to refuel every day. The higher the oil price, the lower the income."

Orel looked at the account book and analyzed the oil prices in the past three years. On May 28, 2020, the price of gasoline per liter of E10 was only 1.13 euros; the rise last year did not exceed 1.7 euros; but after the start of the conflict in Russia and Ukraine this year, oil prices rose rapidly, and the price of gasoline per liter of E10 reached a high of 2.19 euros on March 15. In recent times, German oil prices have dropped, and drivers are also very happy. But now it has begun to rise again. On October 5, the latest E10 gasoline price has reached 1.89 euros, and it is about to break through the 2 euro level again.

The United States may find it difficult to rescue itself

The United States will also bear heavy pressure. CNN said that for months, the U.S. government has been actively carrying out activities at home and abroad to alleviate the soaring energy prices after the conflict between Russia and Ukraine. The efforts have begun to show results, and the price of gasoline in the United States has fallen for nearly 100 consecutive days.

Previously, an analysis said that the Biden administration’s target for low oil prices is not pure. On the one hand, the US midterm election is approaching, and Biden and also urgently need to stabilize prices to gain votes. On the other hand, it is related to the suppression of Russia. On October 5, the NPC commented that a sharp cut in oil production may benefit Russia, the co-chairman of OPEC+, and that an increase in energy revenue is crucial to it. The Biden administration expects low oil prices to lower Russia's strength.

Now, facing the situation of oil prices rebounding in the future, the Biden administration announced that it will release another 10 million barrels from its strategic oil reserves in November to stabilize the market. Xiamen University China Energy Policy Research Institute Dean Lin Boqiang told the Global Times reporter: "10 million barrels of oil are insignificant in the face of the huge fossil fuel demand in the United States, and it is likely not to stabilize local oil prices."

Song Guoyou also has a similar view. He also told the Global Times reporter: "Although the United States is a major oil producer, there are three reasons that it cannot avoid the impact of OPEC+' production cuts. First, the United States is also a major oil demand country, and its domestic oil may not meet its own demand; second, increasing fossil energy is contrary to the Biden administration's clean energy plan, so it will not issue production increase instructions easily; third, American oil manufacturers are very likely to put their own interests first and are unwilling to obey the Biden administration's instructions to increase production and reduce prices."

The current environment is not conducive to a virtuous cycle

In September, OPEC's monthly report still maintained its forecast for strong growth in global oil demand. It is expected that global oil demand will increase by 3.1 million barrels per day in 2022 and 2.7 million barrels per day in 2023. The International Energy Agency (IEA) also predicts that oil demand will continue to maintain a growth trend this year and next two years. It is expected that global oil consumption will increase by 2 million barrels per day to 99.7 million barrels per day this year, and demand will continue to increase by 2.1 million barrels per day to 101.8 million barrels per day in 2023.

demand growth and price increase is undoubtedly a good thing for the oil market. But it is worth noting that the global economy linked to international oil prices may have a different trend. Song Guoyou believes: "Affected by the 'OPEC+' production cuts, global inflation pressure will be difficult to eliminate in the short term. The trend of oil prices has a huge impact on the global economy, so I believe this will have a medium-term impact on the global economy. "

Lin Boqiang also said: "The pressure on global inflation may continue to increase. "In addition, in his opinion, after crude oil production cuts and prices increase, global inflation will become more and more intense. At that time, central banks in various countries will continue to raise interest rates and calm inflation, but the reduction of capital liquidity will cause an economic recession, and energy demand will also decrease again, forming a negative cycle. "At present, it is impossible to judge how long the impact of this 'OPEC+' production cut will last, because geopolitics determines the time period for the unstable global energy situation and economic situation. "Lin Boqiang said.