International oil prices have skyrocketed! Saudi Arabia intends to drive a major cut in production, will OPEC + eventually break with Europe and the United States?
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Financial Associated Press, October 3 (Publisher Zhao Hao) At the start of the New York market on Monday (October 3), international crude oil prices rose sharply.
The specific market situation shows that the price of light sweet crude oil (WTI) futures for November delivery on the New York Mercantile Exchange increased by more than 6%, reaching a high of USD 84.53 / barrel. current has shrunk to about 4%, to $ 82.85 per barrel; Brent crude oil futures for December delivery on the exchange rose 3.7% to $ 88.30 a barrel, hitting the $ 90 mark at its peak.
On Wednesday (5 October), members of the Organization of Petroleum Exporting Countries (OPEC) and some non-OPEC oil producing countries such as Russia will hold a regular monthly meeting of the “OPEC +” mechanism.
According to several media outlets, a source familiar with Saudi Arabia’s energy policy revealed that Saudi Arabia, which dominates OPEC +, could prompt the organization to announce a sharp cut in production.
This echoes a report from last week. At the time, one person made it clear that OPEC + was “very close” to announcing production cuts again; the other two were more conservative, revealing only that members were talking about the matter, but the extent of the potential cuts remained unclear.
“We also observed that there is a high probability that the oil cartel will choose to cut production significantly,” said Helima Croft, head of commodities strategy at investment bank RBC Capital Markets. Croft last week predicted the cut could be in the range of 500,000 to 1 million barrels per day, which equates to roughly 1% of global supply.
A source familiar with Saudi energy policy replied that a cut of this magnitude seemed possible. According to him, the oil market is already in excess and demand is weakening due to the sluggish global economy.
The tug-of-war in the price of oil rises
Some media outlets have called OPEC + ‘s “potential” decision to cut production this week as a major turning point for the group.
Almost a month ago (September 5), OPEC + reduced its October oil production level by 100,000 bpd, surprising many traders who had forecast unchanged production as prices above $ 90 a barrel were already taking the pressure off. global consumers.
At the time, the Saudi Minister of Energy explained that it was a proactive and forward-looking decision that indicated an “attitude” of the organization: the focus of OPEC on supporting the stable and efficient functioning of the market.
If OPEC + really cuts production this week, it would almost mean an escalation of conflicts with Western countries like the United States. Market analysis believes Saudi Arabia appears determined to raise oil prices above $ 90 a barrel, which is unacceptable for both the US and Europe.
At the moment, many countries in Europe and the United States are facing high inflation and to alleviate the high price of energy, they have not only sold off their oil reserves many times, but also the heads of state of many countries, including Biden, went to the Gulf countries to ask for an increase in production.
Goldman Sachs, a leading investment bank, analyzed that OPEC + production cuts will help bolster market expectations for higher oil prices and limit the decline in oil prices. Goldman Sachs reiterated its bullish view on oil, as well as its preference for long-term crude oil positions, and extended the position through the end of the year.
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