OPEC and Russia now in full control of global energy markets

techman1

It looks like OPEC+ are playing the energy markets beautifully in the aftermath of Covid. The West has basically handed the ball to OPEC+because they are transiting to "Green energy" and the "New economy" and won't be needing fossil fuels anymore , well thats the narrative anyway except its not actually really true.

By curtailing supply in the knowledge that the Western oil companies are not actually looking for more reserves (which they have loudly proclaimed) they have increased the price substantially and curtailed the ability of western governments to impose carbon taxes on already expensive energy, nobody noticed last year but there is uproar this year. If energy is to be expensive to encourage people to switch to "clean energy" OPEC has calculated that they will take alot of that increase Thank You Very Much

Cluedo Monopoly

Let's nuke em all!

techman1

I see Biden in desperation now trying to get the oil price down, he wants to use their strategic reserve and other countries reserves to bring down the oil price. This is clearly a desperate measure and is doomed to fail as Japan has said it cannot do this.

Just shows that all this cop26 stuff is a load of rubbish , they should be delighted the oil price is rising yet Joe Biden is in desperation. We are a long way away from getting off oil, cop26 was all talk and they haven't a hope of reaching their targets

Larbre34

The OP isn't really accurate.

Prices and production are not in synch, never have been. And thats only talking about the price element linked to actual production capacity. So much of it has to with speculation about stock, the supply chain, winter demand, future prospects being sealed etc.

We are currently paying for the price curve that comes behind the crashing drop in production during peak Covid, when if you remember, workers at the well-head and in refining were all sent home and tankers ended up at anchor, full of oil that wasn't being unloaded, leaving them in the wrong parts of the World at the wrong time, costing everyone in the system an absolute fortune. When oil went negative, it was for a reason. When you lash the whip like you see in the pricing now, thats for a reason too. That whip wave will also susbside.

You don't remedy that crash in a well run system overnight, but the fact is OPEC added 500k bpd in October and are increasing that as their resources return to normal and their logistics resumes a sustainable pattern.

An oil price of $70/b should be a pump price in Ireland of about 1.30 for either road fuel. The rest we are paying for corrections. It will ease out to that sort of pump price soon enough, less if oil flattens further, to $55/60, which is what Saudi Aramco one described as the "beautiful price" for this current generation. Profitable, sustainable, affordable to the consumer.

Podge_irl

OPEC are not even remotely internally consistent on what they want from the oil price, and they are certainly not in cahoots with Russia on it. Saudi Arabia alone drive a lot of what OPEC does and they face a lot of internal dissent over it.

Unfortunately American presidents live and die over the gas price - it is nonsensical but it is what it is.

techman1

"OPEC are not even remotely internally consistent on what they want from the oil price, and they are certainly not in cahoots with Russia on it"

maybe historically that has been the case but currently Putin and Saudi Arabia are cooperating, its working a dream for them at the moment why would they dissent. The Arab spring disaster has taken Libya off the table as a serious producer, ditto Venezuala but for different reasons.

I thought oil was supposed to be so last century and yesterdays energy source and that it would be left in the ground as "stranded assets" etc etc. At this juncture that sounds like a load of rubbish, we are just as dependant on oil as we have always been. Renewables, electric cars etc are having no effect on the demand for oil

Markus Antonius

https://www.boards.ie/discussion/comment/118205038#Comment_118205038

He's desperate because he (well his advisors) are thinking about the mid-terms next year and subsequently 2024. What a mess for poor Joe!

Larbre34

Does Joe Biden or anyone else realise how insignificant the levels of strategic reserve actually are?

In America, its 31 days worth of average demand. Far less than that at winter demand levels. Using it would indicate such a panic as to drive the wholesale price up to about $150/b and make the strategic reserve look like a grease stain.

Its a lot less than 31 days in other countries by the way.

Esel

I thought that the USA are self-sufficient in oil?

Podge_irl

https://www.boards.ie/discussion/comment/118208855#Comment_118208855

It depends on the oil price. At higher oil price levels more of the US oil becomes economically viable to extract.

Podge_irl

https://www.boards.ie/discussion/comment/118207977#Comment_118207977

At the moment perhaps, but it won't last. Ultimately the rest of OPEC/Russia has to contend with the fact that Saudi Arabia can afford for the oil price to be a lot lower than they can and are thus most resistant to run cuts.

Of course we are still dependent on oil. The vast majority of transport requires it still. Renewables and electric cars are obviously having an effect and that effect will increase over time.

https://www.boards.ie/discussion/comment/118208855#Comment_118208855

Only when the price is high enough because it's expensive crap to get at and process. Was it last year and about 6 years ago They went like a year with no new operations and a ton of bankruptcy? Obviously it's not as bad as it's made out to be (they could leave some of the massive profits from good times to cover the bad times rather than just extract the cash then start over) but the price where it's worth it is higher than elsewhere. For the Saudis it may as well be a case of hit a pile into the ground and just barrel and send off what comes out

techman1

looks like Joe Biden's strategy of releasing oil from the strategic reserve has backfired as the oil price has actually gone up. Two weeks after attending Cop26 and all the promises of getting off of fossil fuels and now he is begging OPEC to pump more oil. Its getting an awful lot like the early 70s, first the ignominious retreat from Afghanistan, OPEC wrenching back control of the oil market and the return of rampant inflation and the weakest US presidency since Gerald Ford and Jimmy Carter.