Oil generals OPEC + deprived the United States of cheap gasoline: what is the role of Russia

Alliance countries did not open raw material taps at full capacity

The OPEC+ members made a virtually sensational decision and increased the September production quotas not by 650,000, as previously planned, but by only 100,000 barrels per day. According to experts, by doing so, the alliance signaled that it does not want to make concessions to Washington, which requires exporters to open oil taps at full capacity in order to reduce record prices for gasoline in the United States.

The latest OPEC+ resolution does not mean at all that exporters will actually increase production by the corresponding amount. The Alliance is not able to meet the growing quotas, as its production is already approaching its maximum levels. The question arises: why do oilmen constantly increase production limits, if their production capabilities leave much to be desired and are clearly not able to quickly increase the output of wells?

The answer lies in the strategic plane of reasoning of the representatives of the alliance, and first of all of Saudi Arabia. Despite promises to increase the kingdom’s daily production in July-August by a total of more than 510 thousand barrels, which were given by Crown Prince Mohammed bin Salman to US President Joe Biden, the country’s state holding Saudi Aramco is noticeably behind even the allowed quotas.

Meanwhile, the demand for “black gold” continues to grow: according to the OPEC + technical committee, in 2022 the need for raw materials will increase by 3.4 million barrels per day, and in 2023 it will add another 2.7 million “barrels”. It is possible that the Saudis are trying to hide the “ace in the hole”, deliberately limiting their oil industry and thereby maintaining high hydrocarbon prices, so that at the right time, when the planet is faced with the threat of a large-scale fuel starvation, in a matter of weeks, throw out the necessary amount of energy resources to the world market . Free capacity will also be needed in the event of a fall in the price of “black gold”, as it will allow you to earn on increased sales volumes.

At the same time, our country is quite capable of taking advantage of similar circumstances. The other day, Brussels postponed the introduction of a ban on insurance of tankers with Russian oil, which are sent to countries outside the EU. Such a curtsy makes it easier for domestic producers to access foreign trading floors, especially to customers in India and China, who have recently shown a reverent interest in energy resources from our country.

“It’s no secret that exports to Asia come with significant discounts,” says Sergey Suverov, investment strategist at Arikapital Management Company. “Nevertheless, with quotes above $100 per barrel, Russia, regardless of the discount, will receive almost double the profit from foreign supplies of “black gold.”

Now the world oil market is concerned not with prices, but with the volume of hydrocarbon supplies. It is worth noting that the current meeting of the alliance was the first meeting of oil ministers after the death of Mohammed Barkindo, who headed OPEC until recently. The cartel’s new general secretary, Haytham al-Ghais, represents Kuwait and appears to favor Russia, even though his country is considered one of the US’s partners. This is confirmed by the decision on the minimum increase in production in September.

“Oil producers in the Persian Gulf are gradually moving away from Washington, which is experiencing an economic shock from high domestic prices for motor fuel,” said Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation. – At the same time, the countries of the Arabian Peninsula are not getting closer to Russia, their national interests simply coincide with ours. One thing is obvious – Biden’s summer tour of the Middle East, during which the American president insisted on maximizing the production of “black gold”, the high cost of which will now remain high, completely failed.

Published in the newspaper “Moskovsky Komsomolets” No. 28839 dated August 4, 2022

Newspaper headline:
OPEC denied Biden cheap oil