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Market News International oil market chaos escalates: "OPEC+" increases production ahead of schedule and "oil ban" may lead to intensified market competition
International oil market chaos escalates: "OPEC+" increases production ahead of schedule and "oil ban" may lead to intensified market competition
Against the backdrop of less-than-expected increases in OPEC+ production and strong global demand for crude oil and refined oil products, it is difficult to reverse the accelerated upward trend of international oil prices. Jeremy Weir, chief executive of Trafigura, the world's third-largest independent oil trader, warned that oil prices could reach as high as $150 a barrel by the end of the year.
2022-06-13
9362
Entering June, the international oil market ushered in another wave of ups and downs. With the EU's announcement that it will implement a ban on Russian crude oil imports by sea, Russian crude oil products have been subjected to the most severe "blockade" in Europe so far, which not only further tightens the already tight supply, but also forces Russia to adjust its crude oil export structure.
OPEC+ increases production ahead of schedule
The "OPEC+" production reduction alliance said in a statement that the production adjustment originally planned in September will be brought forward to July and August, and the scale of crude oil production will increase from the current 432,000 barrels per day to 647,000 barrels per day. , an increase of nearly 50%, and plans to hold a monthly regular meeting on production reduction in advance at the end of June to assess the trend of the international oil market at any time.
The "Financial Times" pointed out that this is the first additional production increase since the "OPEC+" production reduction alliance reached an agreement to reduce production in April 2020, marking that the global crude oil market is increasingly in short supply.
It is reported that Saudi Arabia and the United Arab Emirates will be responsible for most of the increase in production. Saudi Arabia said it would work hard to overcome the supply gap in the market after the "blockade" of Russian crude oil. According to "OPEC+" data, Russia's crude oil production fell by nearly 9% in April, and it is almost impossible to rely on OPEC, Canada and other countries to fill the gap. In addition, from a geographical point of view, Europe is the most affordable to buy Russian crude oil. Importing crude oil from Canada, the United States, and the Gulf region has high transportation and insurance costs.
It is worth noting that Russia's influence in the Gulf region may also bring variables to the direction of the oil market. It is reported that long before the "OPEC+" agreement to increase production, Russian Foreign Minister Sergey Lavrov had visited the Gulf countries consecutively in May and held collective talks with the foreign ministers of the Gulf countries. The Gulf countries represented by Saudi Arabia made it clear that they would not would participate in any sanctions against Russia. Saudi Energy Minister Prince Aziz publicly stated that Saudi Arabia has always regarded Russia as a key energy partner.
"Oil ban" may intensify market competition
On June 2, the EU officially adopted the sixth round of sanctions against Russia, the most notable of which is the ban on the import of Russian crude oil by sea before the end of the year, and the exemption for crude oil transported through pipelines. Before reducing crude oil imports from Russia by about 90%.
In this regard, Mikhail Ulyanov, the permanent representative of Russia to the Vienna International Organization, said that the imposition of an import ban on Russian crude oil will backfire on European countries.
The European Union and Britain are also reportedly considering a deal that would ban insurance for ships carrying Russian crude, aimed at further weakening the Russian crude trade. However, S&P Global Vice Chairman Daniel Yergin said: "If Europe bans insuring oil tankers carrying Russian crude, it could intensify competition for crude in the region, leading to increased market volatility."
On June 6, Medvedev, vice chairman of the Russian Federation Security Council, said: "The prohibition of providing insurance for Russian crude oil carriers will lead to difficulties in transporting crude oil to third countries, but we can sign intergovernmental agreements with third countries and provide State guarantees to resolve.”
The "Financial Times" pointed out that European countries' dependence on Russian crude oil is not the same, and the "oil ban" may lead to "distortion" of competition in the intra-European crude oil trading market. In fact, since the conflict between Russia and Ukraine, the amount of European crude oil imported through pipelines has actually increased, mainly because European buyers have used discounted prices to rush to stock up before the "oil ban".
Severe imbalance between supply and demand will boost oil prices
The broader sanctions imposed by the EU on Russia have led to an accelerated reduction in the supply of crude oil in the market, further boosting the volatility and strengthening of international oil prices. On June 7, Brent crude oil has returned to 120 US dollars / barrel, and the US WTI price is also approaching 120 US dollars / barrel. Wall Street investment banks even generally believe that the price of WTI may return to a high of $130 per barrel.
Sankey Research, an energy market research company, pointed out that the relatively modest increase in production started by "OPEC+" in July was not enough to boost the oil market, nor could it prevent oil prices from continuing to "surge". The US CNBC News Network said that "OPEC+" failed to complete the production increase target in the previous months, and the latest production increase target of nearly 650,000 barrels per day will not be unexpectedly.
Francisco Blanch, head of commodities and derivatives strategy at Bank of America, said Saudi Arabia was the only OPEC country with more spare capacity. "We've had record gasoline and diesel prices, and now, crude oil prices are hitting records, maybe even $185 a barrel."
In fact, Saudi Arabia has been hesitant to increase production rapidly, and sees spare capacity as the last line of defense against severe imbalances in the oil market. Christyan Malek, head of oil and gas industry research at JPMorgan, said Saudi Arabia remains cautious about using all its spare capacity and believes sufficient reserves are needed to deal with any changes that may arise in the market.
On the whole, against the backdrop of less-than-expected increases in OPEC+ production and strong global demand for crude oil and refined oil products, it is difficult to reverse the accelerated upward trend of international oil prices. Jeremy Weir, chief executive of Trafigura, the world's third-largest independent oil trader, warned that oil prices could reach as high as $150 a barrel by the end of the year.
Source: International Energy Reference
OPEC+ increases production ahead of schedule
The "OPEC+" production reduction alliance said in a statement that the production adjustment originally planned in September will be brought forward to July and August, and the scale of crude oil production will increase from the current 432,000 barrels per day to 647,000 barrels per day. , an increase of nearly 50%, and plans to hold a monthly regular meeting on production reduction in advance at the end of June to assess the trend of the international oil market at any time.
The "Financial Times" pointed out that this is the first additional production increase since the "OPEC+" production reduction alliance reached an agreement to reduce production in April 2020, marking that the global crude oil market is increasingly in short supply.
It is reported that Saudi Arabia and the United Arab Emirates will be responsible for most of the increase in production. Saudi Arabia said it would work hard to overcome the supply gap in the market after the "blockade" of Russian crude oil. According to "OPEC+" data, Russia's crude oil production fell by nearly 9% in April, and it is almost impossible to rely on OPEC, Canada and other countries to fill the gap. In addition, from a geographical point of view, Europe is the most affordable to buy Russian crude oil. Importing crude oil from Canada, the United States, and the Gulf region has high transportation and insurance costs.
It is worth noting that Russia's influence in the Gulf region may also bring variables to the direction of the oil market. It is reported that long before the "OPEC+" agreement to increase production, Russian Foreign Minister Sergey Lavrov had visited the Gulf countries consecutively in May and held collective talks with the foreign ministers of the Gulf countries. The Gulf countries represented by Saudi Arabia made it clear that they would not would participate in any sanctions against Russia. Saudi Energy Minister Prince Aziz publicly stated that Saudi Arabia has always regarded Russia as a key energy partner.
"Oil ban" may intensify market competition
On June 2, the EU officially adopted the sixth round of sanctions against Russia, the most notable of which is the ban on the import of Russian crude oil by sea before the end of the year, and the exemption for crude oil transported through pipelines. Before reducing crude oil imports from Russia by about 90%.
In this regard, Mikhail Ulyanov, the permanent representative of Russia to the Vienna International Organization, said that the imposition of an import ban on Russian crude oil will backfire on European countries.
The European Union and Britain are also reportedly considering a deal that would ban insurance for ships carrying Russian crude, aimed at further weakening the Russian crude trade. However, S&P Global Vice Chairman Daniel Yergin said: "If Europe bans insuring oil tankers carrying Russian crude, it could intensify competition for crude in the region, leading to increased market volatility."
On June 6, Medvedev, vice chairman of the Russian Federation Security Council, said: "The prohibition of providing insurance for Russian crude oil carriers will lead to difficulties in transporting crude oil to third countries, but we can sign intergovernmental agreements with third countries and provide State guarantees to resolve.”
The "Financial Times" pointed out that European countries' dependence on Russian crude oil is not the same, and the "oil ban" may lead to "distortion" of competition in the intra-European crude oil trading market. In fact, since the conflict between Russia and Ukraine, the amount of European crude oil imported through pipelines has actually increased, mainly because European buyers have used discounted prices to rush to stock up before the "oil ban".
Severe imbalance between supply and demand will boost oil prices
The broader sanctions imposed by the EU on Russia have led to an accelerated reduction in the supply of crude oil in the market, further boosting the volatility and strengthening of international oil prices. On June 7, Brent crude oil has returned to 120 US dollars / barrel, and the US WTI price is also approaching 120 US dollars / barrel. Wall Street investment banks even generally believe that the price of WTI may return to a high of $130 per barrel.
Sankey Research, an energy market research company, pointed out that the relatively modest increase in production started by "OPEC+" in July was not enough to boost the oil market, nor could it prevent oil prices from continuing to "surge". The US CNBC News Network said that "OPEC+" failed to complete the production increase target in the previous months, and the latest production increase target of nearly 650,000 barrels per day will not be unexpectedly.
Francisco Blanch, head of commodities and derivatives strategy at Bank of America, said Saudi Arabia was the only OPEC country with more spare capacity. "We've had record gasoline and diesel prices, and now, crude oil prices are hitting records, maybe even $185 a barrel."
In fact, Saudi Arabia has been hesitant to increase production rapidly, and sees spare capacity as the last line of defense against severe imbalances in the oil market. Christyan Malek, head of oil and gas industry research at JPMorgan, said Saudi Arabia remains cautious about using all its spare capacity and believes sufficient reserves are needed to deal with any changes that may arise in the market.
On the whole, against the backdrop of less-than-expected increases in OPEC+ production and strong global demand for crude oil and refined oil products, it is difficult to reverse the accelerated upward trend of international oil prices. Jeremy Weir, chief executive of Trafigura, the world's third-largest independent oil trader, warned that oil prices could reach as high as $150 a barrel by the end of the year.
Source: International Energy Reference
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