Global energy game has entered a white-hot stage.
On October 5th local time, the OPEC+ meeting unanimously agreed that in November and December this year, major oil-producing countries such as Saudi and Russia will jointly reduce production by 2 million barrels per day, which is the biggest force since OPEC+ agreed to significantly reduce production when the new crown epidemic began in 2020. news has caused oil prices to rise by more than 2% to the highest level in the past three weeks, with Brent Oil reaching $94.
Market insiders pointed out that OPEC+ production cuts angered the United States , and Biden seeks to lower oil prices before the November midterm elections.
media said earlier, U.S. officials tried to obstruct OPEC+ production cuts. White House even described the prospect of production cuts as "a complete disaster" and warned that this could be seen as a "hostile act."
It is obvious that this effort from the United States ended in failure. After the announcement of the news of production cuts, the White House denounced OPEC+ short-sightedness.
Media analysis said that the United States may subsequently introduce more countermeasures , such as the export ban on some products.
Ignore the US lobbying. Should Saudi Arabia "resist the US" before the key election?
OPEC's large-scale production cut decision may increase the impact on the inflation struggle driven by high energy costs in Europe, the United States and other countries.
Since the beginning of this year, with the Russian-Ukrainian conflict and the United States and its allies imposed severe sanctions on Russia, the world's second largest crude oil exporter, global oil prices have soared, and domestic inflation in the United States is high, and public grievances are boiling.
On October 3, local time, the latest poll released by Monmouth University in the United States showed that more than 80% of Americans believe that inflation is their most concerned issue.
As the US midterm election approaches, Against the backdrop of the recent soaring US gasoline prices, the White House is trying hard to avoid the implementation of the OPEC+ major production cut plan to deal a major blow to the Democratic Party’s election situation. media quoted people familiar with the matter as saying that the Biden administration launched a "full pressure campaign" , as the final effort to dissuade OPEC+ from significantly reducing oil production.
media reported that in the past few days, a number of top energy, economy and foreign policy officials, including Biden's chief energy envoy Amos Hochstein, U.S. Treasury Secretary Janet Yellen, and senior U.S. national security official Bret McGerk, have contacted OPEC government officials and tried to lobby countries such as Kuwait , , Saudi Arabia and the UAE to vote against production cuts.
In July this year, in order to convince Saudi Arabia to increase production, US President Biden visited Saudi Arabia and met for the first time with Saudi Crown Prince Mohammed bin Salman. A few weeks later, OPEC+ only agreed to increase daily output by 100,000 barrels in September, setting the smallest increase in the league's history. Many public opinion mocked Biden for basically being useless and gaining little.
Earlier this year, after the outbreak of the Russian-Ukrainian conflict, Brent crude oil once soared to more than $125 per barrel, and at the end of September it once gave up all the gains since February, falling to the $80 line. The media quoted a person familiar with Saudi strategy as saying that the country believes that the United States did not "act in good faith" on the grounds that the United States manipulated its own data to lower oil prices.
Analysts said that 's "Saudi-American" alliance is deteriorating, and Saudi Arabia's decisions are "increasingly independent of Washington."
JPMorgan analyst Christyan Malek said: "Saudi Arabia will not hesitate to take a tough attitude because it believes that the oil market needs support, no matter how the United States intervenes."
Credit Suisse wealth management department Greater China Vice Chairman Tao Dong commented that this is the largest production cut since 2020. also declared that the United States has failed to put pressure on OPEC . Neither Biden’s July visit nor the flight visit of senior US officials this week made Saudi Arabia change its mind.
The United States denounced OPEC+ short-sightedness, suggesting that more SPRs may be released or more countermeasures may be introduced
OPEC+ production cuts were announced, Biden said that OPEC+ does not need to reduce oil production.U.S. Secretary of State Blinken said that the Biden administration is trying to ensure effective energy supply.
The White House also immediately issued an announcement regarding the November OPEC+ production cut decision, saying that Biden was disappointed with the "short-sighted behavior" of the OPEC+ oil production cut decision. The U.S. Department of Energy will release 10 million barrels of SPR in November, and Biden will continue to guide the Strategic Oil Reserve (SPR) release, media said this hints that the United States may release more SPR.
The Biden administration will also negotiate with Congress on how to reduce OPEC+'s control over energy prices.
latest data shows that in the week ending September 30, U.S. strategic crude oil inventories fell by 6.194 million barrels to 416.389 million barrels, the lowest since the week ended July 6, 1984.
Before OPEC+ officially announced production cuts, White House spokesman Karine Jean-Pierre declared on Tuesday, "We have not considered a new strategic oil reserve release plan. The White House is working directly with the industry to ensure that the private sector is doing its best to build resilience."
In other words, only took one day and the United States' attitude towards whether SPR will be released further.
media said that the United States may subsequently introduce more countermeasures, such as export bans for some products. The White House has allegedly asked the U.S. Department of Energy to analyze whether banning the export of gasoline, diesel and other refined petroleum products would reduce prices. U.S. government officials are discussing a ban on refined oil exports with senior oil industry leaders as the risk of OPEC+ production cuts could push up oil prices before the November midterm elections.
With OPEC+'s production cut, the NOPEC bill may reappear on the US agenda. The bill would allow the U.S. government to sue OOP Exporting Countries member states for manipulating energy markets and could seek billions of dollars in compensation. The bill has received wide bipartisan support in the U.S. Congress.
2 million barrels of production cut "thunder and raindrops are small"? Goldman Sachs: The net production cut was only 400,000 to 600,000 barrels
In the eyes of Wall Street institutions, the actual scale of this OPEC+ production cut is far less than as large as it seems.
First of all, it should be clear that the production cut is an adjustment based on the OPEC+ production baseline, that is, it is a decrease of 2 million barrels per day from the baseline, while the baseline itself has not adjusted.
Damien Courvalin, head of energy research at Goldman Sachs and senior strategist at commodity , estimates that Russia's current oil production is about 1.3 million barrels/day lower than its oil production quota, so Russia needs to be exempted from the 2 million barrels/day production cut.
Goldman Sachs expects that the adjustments made by based on the baseline actually only cut production by about 1.5 million barrels per day, which still does not include Russia's repositioned production. Goldman Sachs believes that the 2 million barrels per day OPEC+ joint production cut is equivalent to that based on this baseline adjustment, the quota has only been further reduced by 500,000 barrels per day.
Compared with Goldman Sachs' net production estimates for OPEC+ countries on September 27, the effective net production cuts of in November and December this year will be only 400,000 to 600,000 barrels per day, mainly from Saudi Arabia, Iraq, , Kuwait, and the United Arab Emirates and other OPEC oil producers in the Persian Gulf region. This is similar to the result of Goldman Sachs expects OPEC+ to announce a quota reduction of 1 million barrels per day.
Regarding this OPEC+ production cut, Amina Bakr, chief OPEC reporting reporter of Energy Intelligence, energy industry information company, confirmed that Goldman Sachs' calculations were correct.
Bakr believes that starting from November, based on the required output in August this year, a decrease of OPEC+ total output by 2 million barrels per day means that the actual production cut is slightly less than 1 million barrels per day. After the joint production cuts of
OPEC+ was announced, Saudi Energy Minister Abdul Aziz bin Salman said that he would actually cut production by 1 million to 1.1 million barrels per day. Analysts at investment bank Jeferies expect actual production cut of 900,000 barrels per day.
Wall Street NewsEarly mentioned that because several countries have much lower oil production than their quota, they do not have to reduce their output anymore. This production cut is shared proportionally among OPEC+ member states, and only eight countries are required to control the actual output.
has analysis and calculations, and the actual production reduction scale is about 880,000 barrels per day.
In addition, last week, Goldman Sachs just lowered its fourth-quarter Brent oil forecast price from $125 per barrel to $100 per barrel.After the announcement of OPEC+ production cuts, Goldman Sachs raised its oil price expectations, and raised its Brent crude oil forecast in the fourth quarter of this year to $110 per barrel, an increase of $10, or 10%.
Goldman Sachs believes that OPEC's decision to cut production from November to December is "very good" for the oil market.
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Global energy game has entered a white-hot
