Page 5 - NorthAmOil Week 47 2021

NorthAmOil COMMENTARY NorthAmOil

Consultancy Rystad Energy has estimated The consultancy added that it had already
that a combined 71.5mn barrels could be anticipated the market tipping into surplus
released by all the countries jointly. Meanwhile, in February 2022, and that the US-led release
investment bank Goldman Sachs estimated could bring this forward to December.
crude reserve releases from South Korea, Japan, “The release may be a case of too much, too
China, India and the UK totalling up to 30mn late, as the oil market was tightest and needed
barrels, which would bring the total, including supply relief in September,” Rystad’s senior oil
US volumes, to up to 80mn barrels. markets analyst, Louise Dickson, wrote in a
This is the first time the US has co-ordinated market comment. This is the first
such a move with some of the world’s largest In addition, the Wall Street Journal reported
consumers of crude. (See NorthAmOil Week on November 24 that certain members of time the US has
46) It puts pressure on OPEC+ to deviate from OPEC+, including Russia and Saudi Arabia, co-ordinated
its chosen strategy and threatens to upset oil are considering pausing their gradual supply
geopolitics. scale-up. Citing sources familiar with the mat- such a move
ter, the newspaper said that other members of
Impact questions the group are not convinced that a pause is nec- with some of the
However, the impact of the co-ordinated release essary. But Rystad also pointed to heightened
on the oil market has been questioned, and expectations in the market that OPEC+ could world’s largest
Argus Media suggested that markets had been move to counteract the SPR release. consumers of
anticipating a larger release. Rystad, meanwhile, “The bold move from the oil importers has
said that if the plans translated into an average opened the door wide open for OPEC+ to adjust crude.
supply addition of 1.2mn bpd over a two-month its supply policy downwards at its next Decem-
period starting in mid-December, that would ber 2, 2021 [meeting],” Rystad said.
be “not immaterial” in a market of 80mn bpd. The consultancy anticipates that spot price
However, it added that with the US swapping premiums are what may be most affected by
32mn barrels rather than selling them outright, additional oil volumes being released onto the
much of the extra supply released onto the mar- market. But it noted that both deferred prices
ket would be temporary, simply “shifting the and the price level in the market itself also
timing of the market dynamics further down depend on what approach OPEC+ takes at its
the road”. next meeting.™

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