Oil is up over 6% today.
In recent months, members of OPEC have expressed frustration with the oil market.
Saying the oil market seemed disconnected from demand and even stating that the oil market was in a “state of schizophrenia.”
This was a very interesting comparison, to say the least.
In a move that reflects their concern about the reliability and neutrality of the International Energy Agency’s data, OPEC+ announced last year that they would stop using the agency’s oil data to assess compliance with production quotas.
They have expressed concerns about the agency’s views on climate change, which they believe have undermined the accuracy of its overall data.
Following the oil crisis of the 1970s, which saw supplies squeezed and prices skyrocketing, the International Energy Agency was established in 1974 to assist industrialized nations in combating the crisis.
Today it advises Western governments on energy policy, and the UNITED STATES is its top financier.
Yesterday,
OPEC+ announced they would collectively cut 1.66 million barrels of oil output daily starting in May.
- Saudi Arabia is cutting oil production by 500,000 barrels per day.
- Russia is cutting oil production by 500,000 barrels per day.
- Iraq is cutting oil production by 211,000 barrels per day.
- UAE is cutting oil production by 144,000 barrels per day.
- Kuwait is cutting oil production by 128,000 barrels per day.
- Kazakhstan is cutting oil production by 78,000 barrels per day.
- Algeria is cutting oil production by 48,000 barrels per day.
- Omen is cutting oil production by 40,000 barrels per day.
- Gabon is cutting oil production by 8,000 barrels per day.
It is worth highlighting that OPEC producers cut output by 2 million barrels a day in October. This was the most significant cut since the beginning of the pandemic and amounted to approximately 2% of global oil demand.
This decision infuriated the West,
The US President said that Saudi Arabia would suffer consequences at the time, and the International Energy Agency warned the decision could tip the global economy into a recession.
However, OPEC is just as frustrated:
At the beginning of this year, the chief of OPEC said nations globally need to invest much more in oil to meet the planet’s energy needs and emphasized the need for a more balanced and fair approach toward climate policies.
He has also said that OPEC is not to blame for soaring inflation and pointed the finger at underinvestment in the oil and gas industry.
According to an article by the Financial Times yesterday, Saudi Arabia was reportedly irritated last week when the Biden administration publicly announced that it would not make new crude purchases to replenish a strategic stockpile that had been totally depleted during the fight against inflation last year.
Currently,
The United States Strategic Petroleum Reserve is at its lowest level since 1983.
Qatar’s energy chief has publicly said that oil and gas should be depoliticized.
Meanwhile,
This is happening as the United States Treasury Secretary warned last month that climate change could trigger asset value losses and harm the US economy.
She conveniently disregards the financial elephant in the room.
The irresponsible monetary policy that the Federal Reserve and other central banks worldwide have been pursuing since the last financial crisis produced this massive asset bubble that is now rapidly deflating, leaving them scrambling to blame anyone but themselves.
But how can we expect anything else?
Today,
The largest oil producer in Russia and India’s top refiner have agreed to adopt the Asia-focused Dubai oil price benchmark and have abandoned the Europe-dominated Brent benchmark.
The winds of change are blowing, and it is becoming increasingly clear that the transformation is beginning with commodities.
What happens next?