Page 6 - MEOG 32

MEOG OPINION MEOG
OPEC+ tiny production increase is a slap in face for Biden
OPEC+
ARAB oil exporters responded to a visit by US President Joe Biden to the region in July with the smallest increase in quotas in history – just 100,000 barrels per day (bpd) at an OPEC+ meeting in Vienna on August 3.
Biden met with Crown Prince Mohammed bin Salman Al Saud (MbS) of Kingdom of Saudi Arabia (KSA) and was all but humiliated by him.
After MbS met Biden as he arrived with the now famous “fist bump”, the prince led the pres- ident into the hall for talks. Although not widely reported by the western press, the Russian press at the event reported that Biden was forced to walk past a photo exhibition of prisoners being tortured at the infamous Abu Ghraib prison in Iraq.
The tiny production cut is more of the same. Analysts have not hesitated to call OPEC’s decision “a slap in the face [to] the Biden administration.”
Relations between the US and KSA have soured in recent years, as the importance of the Kingdom has waned in proportion to the rise in the US domestic shale oil industry. Relations took a further hit after the murder of journalist Jamal Khashoggi in a Saudi embassy in Turkey that brought down international condemna- tion on Riyad (hence the fist bump rather than a handshake).
OPEC retaliated to the change in the oil mar- ket in 2014 by attempting to collapse the price of oil and make the US shale producers economi- cally unviable, but the attempt failed as produc- tion costs at US wells fell and marginal fields were closed down.
In parallel with the deteriorating relations
with the US, those with Russia have blossomed. Russia has long avoided working with OPEC, but that strategy has changed in recent years and Russia has become an active member of the OPEC+ club and co-ordinates with the Middle Eastern members to control oil prices.
Moreover, Arab investment into Russia in regions like Kazan has taken off as the govern- ments of Russia and leading Arab countries con- tinue to co-operate on joint investment projects, many of which are co-ordinated with the Russia Direct Investment Fund (RDIF), Russia’s sover- eign wealth fund.
KSA, like many non-G7 countries, has been taking advantage of the break in East-West rela- tions to play the middle ground as both Wash- ington and Moscow come knocking looking for support in their mutual campaigns to isolate the other.
There are objective reasons for the small
increase in production as well. The majority of
OPEC+ members cannot meet the existing quo-
Targets (mbpd)
Saudi Arabia 11.004 UAE 3.179 Venezuela Exempt Total 26.689
Non-OPEC
Azerbaijan 0.717 Bahrain
Brunei
Kazakhstan
Malaysia
Mexico
Oman
Russia
Sudan
South Sudan
Total 17.167 OPEC+ 43.856
w w w . N E W S B A S E . c o m 0
11.03
3.186 Exempt 26.752
0.718
43.953
Week 32
tas, reports The Bell, and prices are falling even
without decisive action by exporters on fears of a
Increase (mbpd)
0.002 0.004 0 0 0.001
0.012 0.007
0.004 0.026 0.007
0.063
0.001 0 0 0.004 0.001 0 0.002 0.026 0 0 0.034 0.097
10•August•2022
OPEC
A barrel of Brent cost $97 on August 3, down by
Algeria 1.055 1.057
$20 since the start of the year.
Nigeria 1.826 1.83
the history of the cartel, writes Bloomberg.
Targets (mbpd)
August 2022 September 2022
recession in the US and other major economies.
Angola 1.525 1.529
At the meeting of OPEC+ energy ministers
Congo (Brazzaville) 0.325
0.325
in Vienna, the alliance members, led by Russia
Equatorial Guinea 0.127
0.127
and KSA, approved a new increase in oil produc-
Gabon 0.186 0.187
tion quotas of only 100,000 barrels per day (bpd).
Iran Exempt Exempt
For comparison, in July-August, OPEC+ raised
Iraq 4.651 4.663
output by 648,000 bpd every month. The cur-
Kuwait 2.811 2.818
rent increase is the lowest since 1986 in absolute
Libya Exempt Exempt
terms, and in percentage terms is the smallest in
OPEC
Algeria
Angola
Congo (Brazzaville) Equatorial Guinea Gabon
Iran
Iraq
Kuwait
Libya
Nigeria
Saudi Arabia
UAE
Venezuela
Total
Non-OPEC
Azerbaijan Bahrain
August 2022
1.055
September 2022
1.057
Increase (mbpd)
0.002 0.004 0 0 0.001
0.012 0.007
0.004 0.026 0.007
0.063
1.525
1.529
0.325
0.325
0.127
0.127
0.186
0.187
Exempt
Exempt
4.651
4.663
2.811
2.818
Exempt
Exempt
1.826
1.83
11.004
11.03
3.179
3.186
Exempt
Exempt
1.706
0.594
1.753
0.881
11.004
0.075
0.13
0.102
1.71
0.595
1.753
0.883
11.03
0.075
0.13
17.201
P6
26.689
0.717 0.205 0.102 1.706
26.752
0.718 0.205 0.102
1.71
0.001 0
Brunei Kazakhstan
0.004
0.205
0.102
0.205