The OPEC+ meeting is about to put pressure on Biden. Can the tight supply of crude oil be eased?
On November 1, in Asian morning trading, Brent crude oil fluctuated within a narrow range around US$83.5/barrel, while the price of Brent crude oil soared by more than 7% due to the decline in inventories last month. US President Biden delivered a speech in Rome after the G20 summit on Sunday, criticizing Saudi Arabia and Russia for insufficient response in managing energy supply. With the OPEC+ meeting coming this week, the United States is putting pressure on OPEC+ to ease the short-term imbalance between supply and demand in the global energy market.

In Asian morning trading on Monday (November 1), Brent crude oil fluctuated within a narrow range around US$83.5/barrel, while the price of Brent crude oil soared by more than 7% due to the decline in inventories last month. US President Biden delivered a speech in Rome after the G20 summit on Sunday, criticizing Saudi Arabia and Russia for insufficient response in managing energy supply. With the OPEC+ meeting coming this week, the United States is putting pressure on OPEC+ to ease the short-term imbalance between supply and demand in the global energy market.
US Secretary of Energy accuses OPEC+ of causing high oil prices
As the global economy recovers from the impact of the epidemic and crude oil production lags behind supply, crude oil prices have soared this year. The energy crisis, characterized by shortages of natural gas and coal, has also stimulated oil demand. However, OPEC+ only relaxed the supply restrictions imposed last year at a moderate pace.
US Secretary of Energy Jennifer Granholm said: “Natural gas prices are of course based on the global oil market. That oil market is controlled by OPEC+. So this cartel alliance has more say in what is happening.”
Since the visit to the White House, the price of gasoline in the United States has risen by nearly 40%, adding to people's concerns about inflation. The US Federal Energy Information Administration recently predicted that household heating costs will also rise sharply this winter. As the pandemic eases and the global economy is burning more oil again, international and US oil prices have more than doubled in the past year, reaching a seven-year high of more than US$80 per barrel. OPEC+'s drastic cuts in supply have also helped push up crude oil prices. During the worst period of last year's oil price plunge, oil prices fell to a negative value for a while.
(Due to supply concerns, Brent crude oil rose more than 7% last month)
Earlier, a senior U.S. government official said: “It is important that global energy supply keeps up with global energy demand. Global energy demand has almost returned to the level before the epidemic. Global energy supply has not.” Granholm said , The United States still regards the release of strategic oil reserves as one of the "tools" that can be used to reduce oil prices.
Biden: Promoting energy production is "not contradictory" with climate goals
US President Biden said on Sunday that while he urged energy-producing countries to increase fossil fuel production, he also urged countries to commit to energy transition. This is "not inconsistent."
Biden made the above remarks to reporters after several days of difficult negotiations between the leaders of the major economies of the Group of 20 nations. He mentioned that before the COP26 climate talks in Glasgow, the parties lacked progress in achieving climate goals, and he was "disappointed" by this.
During the talks, Biden also pressured OPEC+ to urge energy producing countries with spare capacity to increase production to ensure a strong global economic recovery. Biden said: "This is not at all contradictory, because no one will think that we will no longer use any oil or natural gas this year or even next year."
Biden, for example, said that the United States still needs gasoline, even though its goal is to make electric cars account for half of the vehicles on American roads by 2030. Biden said: “We cannot switch to renewable energy overnight. From now on, it is unreasonable not to use oil, natural gas, or hydrogen.”
OPEC+ meeting held this week, oil producing countries still support current output
Analysts including Goldman Sachs expect that driven by unexpectedly rising demand in Asia, Brent, the global oil benchmark, will rise above US$90 per barrel by the end of the year due to soaring natural gas prices. Of power generation companies switched to oil-burning power generation.
While world leaders and steps will continue to discuss climate change in Glasgow, at the same time, OPEC+ is scheduled to hold a meeting on Thursday and may stick to its plan to increase production by 400,000 barrels per month, although major consumers are increasingly worried about high energy costs. High inflation and hinder recovery. Angola and Iraq are the latest NATO member states that support the current oil production stance.
Traders are still paying attention to the prospect of Iran's resumption of nuclear negotiations with world powers, which may pave the way for Iran to resume oil exports. US Secretary of State Antony Blinken said on Sunday that Tehran has indicated that it will restart negotiations with Europe "towards the end of November."
Last Friday (October 29) Brent crude oil was basically stable, but once fell to around $82 in intraday trading. The tight supply in the crude oil market is reflected in the severe spot premium pricing model, where traders are willing to pay a premium for short-term supplies. The spot spread of Brent crude oil on Monday was US$1.21/barrel, up from 82 cents/barrel a week ago.
(Daily chart of Brent crude oil futures)
At 09:40 on November 1, GMT+8, Brent crude oil is now quoted at US$83.53/barrel.
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