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On October 5th local time, OPEC+ reached an agreement to reduce the total oil output by 2 million barrels per day from November 2022. Stimulated by production cuts, international oil prices rose sharply. On October 7, WTI November crude oil futures closed up $4.19, with rising 4.74% to $92.64 per barrel, and cumulatively rose 16.54% throughout the week . Brent December crude oil futures closed up $3.50, or 3.70%, at $97.92 per barrel, and cumulatively rose 11.32% throughout the week .
Oil is still one of the indispensable energy sources in the world, and its output and price have an important impact on the trend of the global economy . Therefore, OPEC+'s decision to cut production has attracted global attention, especially when inflation in many countries is on the rise. "After the OPEC+ decision to reduce production, the Biden administration considers retaliation," said the US "Political News Network" that the decision of "OPEC+" to announce production cuts has angered the United States. Some angry Democrats vowed to retaliate against , and they proposed multiple retaliation measures.
So, which countries or regions will be greatly impacted after OPEC+ production cuts? What will the U.S. government, which hopes that oil prices will fall?
1. The United States lost its right to speak for oil
http://www.sub.com/Article.com/Fudan University's American Research Center, Song Guoyou said that the reduction in OPEC+ production will have an impact on two types of countries or regions. One is the member states of "OPEC+" such as Russia, Saudi Arabia , Kuwait , etc., which can directly increase revenue in this way; the second is oil importers, which have to bear the result of rising energy costs. Especially the United States and many European countries, as the "big oil importer", are facing pressure from high inflation, so OPEC+ production cuts will have a greater impact on these countries. "
It is worth noting that for the United States, in addition to the rising cost of energy imports, Saudi -led OPEC+ still decided to cut production despite the repeated warnings of the Biden administration, which means that the United States is losing voice in the oil market . This dramatic production cut is about 2% of global supply, which makes Biden 's Saudi Arabia's "seeking oil" trip in July very embarrassing.
But But Bank of the United States Global Commodity Research Director Francisco Blanch is not optimistic about the White House's oil market policy. Blanch said that in fact, there are not many options available in the White House. 's approach to using strategic oil reserves to alleviate the rise in energy prices may only have a counter-effect on the United States. .
He explained that the long-term release of strategic oil reserves will make OPEC's dominance over the global oil market more expanding. " As the reserves gradually exhaust, the United States will increasingly hand over market control and flow into OPEC's hands. ”
2. International oil prices may rise to $130
Regarding the low oil prices called for by the Biden administration, some analysts believe that its low oil price target is not pure. On the one hand, the US midterm election is approaching, and Biden also urgently needs to stabilize prices to win votes, and on the other hand, it is related to the suppression of Russia. On October 5, the US National Public Radio commented that a significant reduction in oil production may benefit Russia's co-chairman of OPEC+, and the increase in energy income is crucial to it. The low oil prices expected by the Biden administration can reduce Russia's strength.
However, to Biden's disappointment, international oil prices rose for five consecutive days, setting the largest single-week increase since March : WTI crude oil rose from below $80/barrel to above $90/barrel, with a cumulative increase of 16.5%, and Brent Oil also increased by more than 10%.
In the face of OPEC+'s production cut decision, on October 6, the official website of the European Commission declared that EU has approved the eighth round of sanctions against Russia and issued a series of plans for a new round of sanctions, including the implementation of price caps on Russian oil products.
The European Commission said that the EU has decided to completely ban the import of Russian crude oil by sea, but with the implementation of the price cap policy, if the price cap price of Russian crude oil remains below the price cap, European operators will be allowed to assist Russia in transporting oil to third countries.
Morgan Stanley predicts in a report released on October 5 that with the sharp reduction of production by OPEC+ organizations and the EU's crude oil embargo on Russia, global oil supply tensions will continue in the future. Morgan Stanley raised the forecast price of Brent crude oil from $95 per barrel to $100 per barrel for the first quarter of 2023.
In addition, before oil prices rose sharply, Goldman Sachs predicted at the end of September that Brent crude oil will reach US$130 per barrel by the end of this year . Goldman Sachs said the crude oil spot market is showing the most tense signs in decades as demand continues to recover while producers are controlling supply. The company said: "As inventory further declines trigger the risk of exhaustion, the commodity returns obtained by investors may increase."
3. U.S.-Saudi relations are tense
"This is a complete disaster that will be regarded as hostilities by the United States." "The United States will review its relationship with Saudi Arabia in the future." In response to the decision to cut oil by OPEC+ a day, the Biden administration of the United States has frequently threatened to retaliate against .
Some Democrats have proposed a number of retaliation measures, including significantly reducing arms sales to Saudi Arabia and withdrawing US troops from Saudi Arabia. According to Reuters html on the 37th, US Secretary of State Blinken said at a joint press conference with Peru Foreign Minister that the United States "is reviewing future relations with Saudi Arabia" and other plans. Blinken said OPEC's decision was "both disappointing and short-sighted". He said: "As for future relationships, we are reviewing some response options. We are negotiating closely with Congress."
Singapore Lianhe Zaobao said on the 8th that senior senators from both parties of the United States also plan to promote the "Anti-Oil Production and Export Monopoly Act" (NOPEC) to put pressure on OPEC.
Saudi Arabia seems very calm to the threat of the United States . On the 7th local time, Saudi Foreign Minister Juber said in an interview with Fox TV in the United States: "I am frank, the reason for the high oil prices in the United States is that the shortage of refining facilities in the United States has lasted for more than 20 years." He said, "The United States has not built a new refinery for decades." Juber emphasized that Saudi Arabia has not politicized oil. " oil is not a weapon. It is not an fighter , not an tank , you can't shoot with it, you can't do anything with it ." He said that Saudi Arabia only regards oil as a commodity, "We regard oil as an important part of the global economy. Some people claim that Saudi Arabia does this (reduces production) to hurt the United States, or participates in politics in any way, is absolutely incorrect."
UK " Financial Times " said: About half a century ago, due to the support of Western countries such as the United States and Europe for Israel in the war, Arab countries decided to form an alliance of oil producers to go to the center of the global political stage and stop supplying oil to Western countries, which led to the first global oil crisis.Today, amid high global inflation and growing anxiety about energy prices and shortages, oil exporters, including Saudi Arabia and Russia, have made a significant decision to cut production, marking a "dangerous break" between oil exporters and the West, especially the United States.
reported that for Saudi Arabia, which has long relied on the United States for military support through "energy for security", this highlights Saudi Arabia's new confidence: it can get rid of the pressure from the United States and take actions that are in line with its business and diplomatic interests. The report quoted S&P vice president Diwan as saying that this move sends a clear signal that Saudi Arabia "has a greater risk of choosing this (independence) path than oil prices rising." UAE political scholar Abdullah said: "Washington obviously hasn't realized that a new bay has appeared. We no longer obey Washington ."
