International oil prices soared! Saudi Arabia intends to lead a sharp production cut, OPEC+ will eventually tear up with Europe and the United States?
Financial Associated Press, October 3 (Editor Zhao Hao) At the beginning 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 crude oil (WTI) futures for November delivery on the New York Mercantile Exchange rose by more than 6%, reaching a maximum of US$84.53/barrel, and the current increase has narrowed to about 4%, at US$82.85/barrel; Brent crude oil futures for December delivery on the exchange rose 3.7% to $88.30 a barrel, nearly breaking the $90 mark at its peak.
On Wednesday (October 5), members of the Organization of the 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 multiple media reports, a source familiar with Saudi Arabia’s energy policy revealed that Saudi Arabia, which dominates OPEC+, may push the organization to announce a sharp production cut.
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, only revealing that members did talk about the topic, but the magnitude of the potential cuts remained unclear.
“We have also observed that there is a strong possibility that the oil cartel will choose to cut production significantly,” said Helima Croft, head of commodity strategy at investment bank RBC Capital Markets. Croft last week predicted that the cut could be in the range of 500,000 to 1 million barrels per day. between, which is equivalent to about 1% of the global supply.
A source familiar with Saudi energy policy responded that a cut of this magnitude seemed possible. In his view, the oil market is already oversupplied and demand is weakening due to the sluggish global economy.
Oil price tug of war escalates
Some media outlets called OPEC+’s “potential” decision to cut production this week as a major turning point for the group.
Nearly a month ago (September 5), OPEC+ cut its October oil production level by 100,000 bpd, surprising many traders who had forecast unchanged output as prices above $90 a barrel were already crowding out. pressure on global consumers.
At the time, the Saudi energy minister explained that it was a proactive, forward-looking decision that indicated an “attitude” of the organization – OPEC’s focus on supporting the stable and efficient functioning of the market.
If OPEC+ really cuts production this week, it will almost mean an escalation of conflicts with Western countries such as the United States. Market analysis believes that Saudi Arabia seems determined to raise oil prices above $90 a barrel, a level that is unacceptable for both the United States and Europe.
At present, many countries in Europe and the United States are facing high inflation. In order to ease the high price of energy, they have not only sold off their oil reserves many times, but even the heads of state of many countries, including Biden, went to the Gulf countries to request an increase in production.
Goldman Sachs, a top investment bank, analyzed that OPEC+’s production cuts will help strengthen the market’s expectations for a rise in oil prices and help 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 into year-end.