David and Goliath -- Biden and OPEC

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   Sharlee01posted 3 years ago

   
   The Biden administration in coordinating with the UK, China, India, Japan, and Korea, will release millions of additional barrels from their own reserves. Note --  None of those nations belong to OPEC+.
   
   Could this risk backfire? Over the summer, Biden asked oil-exporting nations in the Middle East and elsewhere to pump more oil. They all declined. The nations belonging to the oil cartel OPEC+ generally favor oil prices at $70 per barrel or higher, a level that optimizes revenue for them. Common sense tells one more production would lower prices, which are currently around $80.   Major oil producers such as Russia and Iran have no interest in doing Biden any form of favor, and even allies such as Saudi Arabia and Iraq want to maximize oil profits after the long a lean stretch in which prices fell to as low as $20 per barrel under Trump.
   
   The OPEC+ nations have been planning an incremental supply increase of 400,000 barrels per day, but that would boost global supplies by less than one-half of 1%—far less than Biden needs.   Biden plans to release 50 million barrels from the U.S. reserve during the next several months.
   
   Biden hopes --- The arrangement is a confrontation of sorts between oil-consuming nations and oil producers. If OPEC+ continues to pump at expected levels, then the additional supply would lower oil prices.
   
   But OPEC could also promptly cut its own supply, to keep prices up, perhaps even pushing them higher. This raises the specter of a disruptive standoff that pits major producers led by OPEC+ against big consumers, led by the U.S.  The Eurasia Group explained in a Nov. 22 analysis. “Countervailing moves by each side are likely to lead to increased volatility, producing seesawing oil prices and added uncertainty.”
   
   History should give us a view of OPEC's history when it comes to being pushed into a corner. 
   
   Could Biden's latest energy plan to release oil from US reserves be a gamble that the US should not be taking with the current inflation, and unstable economy?
   
   Do you feel Biden's decision to tap US oil reserves incite OPEC to raise prices or will OPEC backdown and pump more oil as Biden has requested?

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   1. 84

      Sharlee01posted 3 years agoin reply to this

      https://www.cnbc.com/2021/11/24/oil-hea … alyst.html
      
      Glad to see CNBC is reporting all the news.
      
      Hard to keep up on all the articles on Biden's latest action hitting on our oil reserves. 
      ENERGY
      Oil prices are headed for $100 despite U.S. efforts to release reserves, analyst says ---  "Oil prices could climb higher despite U.S.-led efforts to rein them in by releasing millions of barrels kept as strategic reserves, Stephen Schork, editor of the Schork Report, told CNBC.
      Oil prices have jumped more than 50% this year, with demand outstripping supply as more countries emerge from national lockdowns and severe restrictions imposed since last year due to the coronavirus pandemic.
      Eurasia Group analysts warned prior to Biden’s announcement that a large-scale stock release by oil consumers before the next OPEC+ meeting may prompt a countermove by the group, resulting in a “disruptive standoff.”
      
      "Oil prices could climb higher despite the U.S. and other major consumers releasing millions of barrels of oil from their reserves to try to keep energy prices down, one analyst told CNBC.
      
      “It’s not going to work simply because the strategic petroleum reserve — any country’s strategic petroleum reserve is not there to try to manipulate price,” Stephen Schork, editor of the Schork Report, said Wednesday on CNBC’s “Squawk Box Asia.”
      
      Strategic petroleum reserves exist only to offset short-term, unexpected supply disruptions, he explained.
      
      “There’s a considerable amount of bets out there that we will see $100 a barrel oil,” Schork said, adding it could happen as early as the first quarter of next year, especially if there is a cold winter in the Northern Hemisphere."

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