04 December, 2021

I’m So Old, I Remember When We Weren’t at the Mercy of OPEC

11 months ago. Seems like a lifetime.

OPEC considers lowering production to account for oil reserve releases (worldoil.com)

OPEC and its allies may re-evaluate plans for reviving oil supplies if the world’s four largest consuming countries go ahead with a co-ordinated release of their strategic petroleum reserves.

India became the latest major consumer to contemplate deploying its stockpiles, potentially assisting the U.S., Japan and China in a move to dampen the inflationary threat of higher energy costs. The U.S. has urged fellow consumers to tap reserves after crude prices hit a seven-year high.

But the potential move pits them against the OPEC+ coalition -- led by Saudi Arabia and Russia -- for control over world oil markets.

“Such a move would potentially raise the stakes in the oil poker game and could produce new strains in the bilateral relationship between Washington and Riyadh,” said Helima Croft, chief commodities strategist at RBC Capital Markets LLC.

The 23-nation alliance already rebuffed calls from U.S. President Joe Biden and others earlier this month to speed up the return of supplies halted during the pandemic. Delegates said that even the modest production increase they have penciled in may now be re-evaluated when the group meets next week.

A year ago, we did what we wanted with our oil production, and if OPEC didn’t like it, we gave them the finger. Now, we are beggars at their door, pleading with them to increase production, while they sit back and laugh.

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