OPEC+ Unmoved As China Remains Non-Committal So Far To Washington’s Call For Reserve Oil Release

According to reports quoting three sources in the oil cartel OPEC, China, the world’s largest crude oil importer, was unsure if it would release oil from its reserves as demanded by the United States, and OPEC producers were not considering altering tactics in light of the US action.

To try to temper prices, US President Joe Biden’s administration announced plans on Tuesday to release millions of barrels of oil from strategic reserves in collaboration with other big consuming nations such as China, Japan, and India.

The United States has made the greatest commitment for the release of reserves, with 50 million barrels of pre-approved sales and market loans, but the measure is seen as less significant without China.

China said on Wednesday that it was working on releasing its own reserves. China was working on its own timeframe, according to a Reuters article published last week. find out more

China “may do more,” Biden said during a conference on Tuesday. Crude oil prices had been decreasing for many days due to fears of a coordinated response, but they rebounded 3% on Tuesday when Washington tapped its strategic reserve, although the market remained uncertain about China’s intentions.

The United States’ decision sparked speculation that the Organization of Petroleum Exporting Countries and Allies, or OPEC+, may consider suspending its present agreement to increase output by 400,000 barrels per day per month, but three sources told Reuters that this is not the case.

Early in the epidemic, fuel consumption plummeted, but it has since rebounded, causing oil prices to skyrocket. Biden, who is suffering dismal approval ratings ahead of next year’s legislative elections, has been angry with OPEC+’s refusal to produce additional oil despite his repeated demands. Retail gasoline prices in the United States have increased by more than 60% in the last year, the highest pace of growth since 2000.

After a 3.3 per cent gain on Tuesday, Brent crude fell 6 cents to $82.25 a barrel on Wednesday. The contract had dropped 10% in the days leading up to the announcement of the rumored synchronized release.

“The market seems to believe in OPEC+ to keep oil balances tight more than it believes in the transitory nature of an SPR release,” said Rystad Senior Oil Markets Analyst Louise Dickson on Wednesday.

OPEC+, which comprises Saudi Arabia and other Gulf allies as well as Russia, has so far turned down pleas to increase output. It will meet again on Dec. 2 to debate policy, but there has been little indication that it will shift course.

Iraq’s oil minister, Ihsan Abdul Jabbar, said on Wednesday that the group is monitoring whether oil markets are balanced, but that it still has to review the newest data before making supply choices.

The company has been struggling to reach existing production objectives as part of its agreement to progressively raise output, and it remains concerned that a rise of coronavirus infections might reduce demand once further.

Washington’s initiative to decrease energy costs by partnering with key Asian nations was a signal to OPEC+ to rein in crude prices, which have risen by more than 50% this year.

The International Energy Agency (IEA), a Paris-based agency, used to oversee multi-country releases from reserves. The International Energy Agency (IEA) does not act to affect prices, but its chairman indicated on Wednesday that some producers are reducing supply too much.

“Some of the key strains in today’s markets may be considered artificial tightness … because in oil markets today we see close to 6 million barrels per day in spare production capacity lies with the key producers, OPEC+ countries,” said Fatih Birol, IEA head.

(Adapted from Trust.org)

Categories: Economy & Finance, Geopolitics, Strategy, Sustainability

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