OPEC + promises to respond if countries tap into their oil reserves – .

0
14
OPEC + promises to respond if countries tap into their oil reserves – .


OPEC + has issued a serious warning to Japan, the United States, China, India and South Korea: Free millions of barrels of oil from your emergency stocks, and we will likely respond.

This response, although OPEC + did not mention specific numbers, would likely alter its plans to ramp up production more slowly to make up for the extra barrels released.

History has shown that OPEC + members are willing to do anything to maintain their market share and keep prices in an ideal range. In 2020, just before the pandemic, Russia and Saudi Arabia engaged in a coup involving oil production and exports – switching to an all-you-can-eat pump policy that flooded the oil market because the two oil titans could not agree on a strategy.

The result was devastating for the markets, which soon after had to contend with a severe destruction in demand for oil due to the pandemic.

So it’s no exaggeration to imagine that this latest threat – aimed primarily at the United States, which is largely behind what most would expect from a coordinated release of barrels of oil from multiple SPR countries – is not idleness.

OPEC + delegates, according to Bloomberg, said this week that the release of millions of barrels of SPRs from major oil consumers was not supported by market conditions.

OPEC + has been saying for more than a month that the market will soon run into surplus, warning global oil markets against too much haste and aggression when it comes to increasing production.

But immense pressure is building up on consuming countries due to high gasoline prices, particularly in the United States, where gasoline prices are often directly correlated with voter support for the current administration.

These high gasoline prices have been a sore point for the Biden administration, which has been caught between pushing for green initiatives and pushing to take action that would lower gasoline prices.

OPEC + will meet next week to discuss their production plans for the following month. OPEC + now says the group may reconsider its plans to add additional production.

By Julianne Geiger for OilUSD

More reads on Oil Octobers:

LEAVE A REPLY

Please enter your comment!
Please enter your name here