The oil market .. Saudi Arabia wins the bet

“Saudi Arabia, the leader of “OPEC +”, has the right to rejoice in the victory of the victor when the countries of the agreement meet tomorrow, Monday.” A phrase that topped a report published by Bloomberg Agency.
The report said: “Now, after 18 months of reducing production during the pandemic period, Riyadh’s production level is scheduled to rise almost to the same level, which it was before the Corona pandemic, 9.8 million barrels per day this month, while the global economy is panting, which is still panting. recovering behind the power supply.”
According to “Bloomberg”, Prince Abdulaziz bin Salman, Minister of Energy, was able to gradually restore production to the extent that another case of excess production avoids reviving crude oil prices to reach $80 a barrel, and this raised the Kingdom’s oil revenues to their highest level in three years, and paved the way for They also have a path towards greater revenues in 2022.
“OPEC+ has had a very good year, they have kept their promise, and they have managed this critical landscape,” said Ben Lowcock, co-head of oil trading at commodity trading company Trafigura Group.
This was very unlikely in the chaos of March of last year, when – for a short time – the decline in demand for oil caused the countries of “OPEC” and its partners to engage in a fierce war on customers, but those bitter memories appear in the distant past, as they prepare The 23 “OPEC +” countries to meet tomorrow, Monday, led by the Kingdom and Russia.
If this delicate balance achieved by “OPEC +” is a threat, it is that the market may become more active, and prices will rise above what is desirable.
The “OPEC +” alliance indicated that it would adhere to its gradual increase schedule by adopting another increase of 400,000 barrels per day for the month of November, but the market has changed since this road map was agreed upon in July.
The shortage of natural gas, which has caused prices to rise to the equivalent of $190 a barrel, is pushing a shift to petroleum products for use in heating and industry, which has increased total demand, and US production has still not fully recovered from the effects of Hurricane Ida, which disrupted about 35 million people. A barrel after the hurricane hit the Gulf of Mexico a month ago, which is equivalent to an “OPEC +” increase for almost two full months.
worried consumers
It is clear that the major consuming countries are concerned, especially if the winter is harsh, as China has directed the major energy companies to secure supplies at any cost, and the government of US President Joe Biden said that it reminded “OPEC” of the need to support the recovery, and National Security Adviser Jake Sullivan met this week Prince Mohammed bin Salman, Crown Prince.
Halima Croft, head of commodity strategies at RBC Capital Markets, says: “OPEC” will be under great and increasing pressure from Washington to increase production and put a ceiling on higher prices, and raising production by more than 400,000 barrels will be an option on Monday.
The world’s largest independent commodities trader, Vitol Group, agrees. The company’s head of innovation says it’s not just that demand is rising as a result of the natural gas shortage, but supply expectations are declining as the prospect of a quick deal to revive Iranian exports diminishes.
Tehran and Washington are in continuous negotiations to reactivate a nuclear agreement and lift US sanctions on Iranian oil shipments, but the talks did not result in any significant progress, and accordingly, the 1.4 million barrels per day of Iranian oil, which was expected to enter the market at the end of 2021, is still outside it. .
Bigger increase?
Some “OPEC +” delegates say in confidential statements that the increase, which will be approved at Monday’s meeting, may be greater than the planned 400,000 per day, and an official said that he may consider scenarios for larger increases.
And the Saudis themselves – according to sources familiar with the kingdom’s opinion – do not want to see prices rise to $100 a barrel, as high fuel costs will limit demand and stimulate the recovery of US shale oil production.
The rise in oil prices, weeks before world leaders meet in Glasgow, Scotland, for a new round of climate talks to dispense with fossil fuels may further support the transition to renewable energy.
But as these sources say, the kingdom is not convinced that the price hike above $80 in London this week is the result of an actual supply shortage.
Amrita Sen, chief oil analyst and co-founder of consultancy Energy Aspects Ltd., said it was likely that OPEC+ would wait before raising production above planned to see if the natural gas shortage was causing oil demand to “actually” and that those moves could be taken. In the future but not now.