Saudis, Russians Consider Pausing Oil Production Increases In Retaliation To Biden SPR Release
When commenting on yesterday’s SPR release announcement by the Biden admin and several assorted hanger-on nations – which has backfired spectacularly sending the price of oil soaring now that the rumor can no longer be sold so the news has to be bought in line with every single SPR release in the past…
… we said that not only was the release far to smmal, but that in retaliation for the SPR release, “OPEC could easily consider halting its production hikes to offset the detrimental SPR impact of lower oil prices on the needed recovery in global oil capex, likely justifying such action as prudent in the face of COVID demand risks.”
Well, fast forward just a few hours when moments ago the WSJ reported that the leaders of OPEC+ and the world’s two top oil producers Saudi Arabia and Russia, are considering a pause to their recent efforts to provide the world with more crude, citing to people familiar with those discussions. The move, as expected, is in retaliation to Washington releasing tens of millions of barrels of oil in an effort to lower prices.
As a reminder, OPEC+ is meeting next week to review the long-term deal they reached earlier this year to boost their collective oil output – the deal involves boosting output by 400,000 barrels a day each month through next year, until the group hits its pre-pandemic pumping level and follows a sharp cut in output in 2020 as demand evaporated amid Covid-19 lockdowns.
However, it now appears that OPEC+ may change its mind and not raise output at all; and while Biden is quick to note that oil prices have hovered near multiyear highs, OPEC and other forecasting agencies have struggled to predict demand amid the on-again-off-again nature of Covid-19 restrictions…
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