Tag Archive for: OPEC

OPEC+ Is Cutting Oil Production Again

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OPEC+ announced a new round of cuts to oil production on Thursday, The Wall Street Journal reported.

The oil cartel, which is responsible for about 40% of the world’s oil production, said that it would reduce production by an additional 1 million barrels per day, equivalent to about 1%of total global daily consumption, according to the WSJ. The fresh round of production cuts will likely keep oil prices at elevated levels as tensions remain high in the Middle East.

The move “essentially shows the group wants to prevent the oil market from being oversupplied, keep control of oil market fundamentals and keep playing the role of central bank in oil markets,” Giovanni Staunovo, a commodity analyst at the Union Bank of Switzerland (UBS), told the WSJ. The cartel’s member countries reportedly disagreed about the size and distribution of the cuts, but the organization agreed in the end to move forward.

As part of the agreement, Saudi Arabia also will extend its 1 million barrel per day cut, which it announced initially in June, the WSJ reported. The cartel also invited Brazil to join its ranks, but Brazilian officials have reportedly not yet decided whether to accept the invitation.

Oil and gas prices in the U.S. have retreated from their high levels earlier this year and during the summer of 2022, but they still remain elevated relative to prices seen before the pandemic. Thursday’s announced cuts will likely keep oil prices between $80 and $90 per barrel for an extended period of time, market analysts told the WSJ.

Notably, that projected floor price is slightly above the Biden administration’s stated target price to purchase supply to refill the strategic petroleum reserve (SPR). President Joe Biden opted to release about 180 million barrels from the SPR in the months leading up to the 2022 midterm elections, but the vast majority of those sales have yet to be replenished.

The SPR’s low levels have come back into focus given the degree of geopolitical uncertainty in the Middle East as Israel wages war against Hamas. Some energy policy experts told the Daily Caller News Foundation that the SPR’s current condition leaves the U.S. more vulnerable to oil price shocks if the war boils over into a more widespread conflict.

Neither the White House nor the Department of Energy responded immediately to requests for comment.

AUTHOR

NICK POPE

Contributor.

RELATED ARTICLE: Biden Begged Russia And OPEC For Oil Last Year. Now He’s Just Begging OPEC

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OPEC Ignores Biden’s Pleas, Decides To Cut Oil Production

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UPDATE: Green Biden scrambles to boost American oil production after OPEC cuts

OPEC+, which includes the 15 OPEC members and the consortium’s Russian-led allies, voted Wednesday to cut oil production by 2 million barrels per day even though the White House urged the group to pump more oil, according to Bloomberg.

OPEC and its Russian-led allies will reduce crude oil production as they are concerned that oil demand will fall as the world enters a recession, Bloomberg reported. President Joe Biden’s senior officials have been attempting to pressure OPEC into voting against a production cut as the White House would consider this to be a “hostile act,” CNN reported on Wednesday.

The administration was “panicking” over OPEC’s potential to cut production as it is concerned that gas prices may continue to rise and hurt the Democrats’ chances in the November midterm elections, according to CNN. The White House aggressively lobbied Kuwait, Saudi Arabia, the United Arab Emirates and other OPEC members to vote against cutting oil production; however, its efforts failed as OPEC+ wants to keep oil prices steady by reducing global supply ahead of winter, according to Bloomberg.

The Brent crude oil benchmark sits at $93 a barrel on Wednesday after peaking at over $120 a barrel in March. An oil price hike could further exacerbate the West’s fuel shortages which are causing household electricity bills and gas prices to skyrocket.

OPEC+ agreed to a small production boost in August after Biden visited Saudi Arabia and asked the OPEC member to pump more oil during a visit to the nation, according to The Washington Post. Biden was also rebuffed by OPEC after he asked its Middle Eastern members to produce more oil in May.

OPEC and the White House did not immediately respond to the Daily Caller News Foundation’s request for comment.

AUTHOR

JACK MCEVOY

Energy & environment reporter.

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Oil Prices Surge Again After OPEC Ignores Biden

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Oil prices surged again Friday after foreign producers ignored the Biden administration’s repeated requests to boost output and resolve global shortages.

U.S. crude oil surpassed $80 per barrel while the lead foreign index broke $81 per barrel, both rising more than 1.5% compared to one day earlier, on Friday morning, according to the latest data. The Middle Eastern cartel Organization of the Petroleum Exporting Countries and its Russian counterpart, collectively known as OPEC+, rebuked the Biden administration Thursday and chose not to alter previously announced plans.

“If you take a look at, you know, gas prices and you take a look at oil prices, that is a consequence of, thus far, the refusal of Russia or the OPEC nations to pump more oil,” President Joe Biden told reporters Tuesday.

Biden and top White House officials have asked OPEC and Russia for more oil and gas multiple times since August as energy prices have skyrocketed. But the administration has also taken steps to increase the hurdles for U.S. producers to increase domestic output. Senior Wall Street energy analyst Edward Moya said OPEC+ had an “easy and quick” meeting Thursday, barely even considering Biden’s repeated requests, Reuters reported.

“At no point did OPEC+ consider changing their output strategy, which was completely the message they had,” Moya told Reuters.

Republican lawmakers have amped up their attacks on the president’s energy policies, saying his decision to hamstring American oil and gas firms is negatively impacting American consumers.

“There’s nothing that’s becoming more expensive than gasoline today,” House Minority Leader Kevin McCarthy said during a recent roundtable on Capitol Hill. “And it doesn’t have to be the case. When gasoline becomes more expensive, the people that it truly hurts are those that are less fortunate.”

Nearly 20 Republican senators wrote to Biden on Friday, urging him to take immediate action to ease the burden on Americans paying more at the pump. A separate group of GOP senators released a comprehensive climate action plan Wednesday countering Democratic climate and prioritizing U.S. energy independence.

COLUMN BY

THOMAS CATENACCI

Energy and environmental reporter. Follow Thomas on Twitter.

RELATED ARTICLE: White House Adviser Says There’s An ‘Energy Crisis,’ Doubles Down On Calls For Boosted Foreign Oil, Gas Production

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EDITORS NOTE: This Daily Caller column is republished with permission. ©All rights reserved.

What Trump and Sanders Said about Oil Prices 4 Years Ago by Daniel Bier

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Remember when complaining about the price of gas was all the rage? The public discourse was awash in pseudo-psychology, hand-wringing about “peak oil,” and an array of conspiracy theories to explain why oil cost so much.

There was much ado about corporate “greed” (the cause of all life’s problems), hissing about “speculators,” nationalist chest-thumping about OPEC, self-proclaimed experts warning that Earth was out of oil, and many inarticulate suspicions about George Bush and Barack Obama.

Economists were pretty sure that the price of oil was related to supply and demand, but what did they know? One cantankerous socialist knew the truth:

Pump prices spiked 5% in the past month… Crude oil prices stood at $108 on Friday, up from only double digits at the beginning of the month. …

What’s the cause? Forget what you may have read about the laws of supply and demand. Oil and gas prices have almost nothing to do with economic fundamentals.

Fortunately, when he wrote that in 2012, Sen. Bernie Sanders was ahead of the game, having never read anything about supply and demand at all. Unencumbered by basic economics, he was able to see that Big Oil “gouging” and Wall Street “speculators” were to blame.

Remarkably, right around the time of the fracking revolution, the price of oil and gas started tumbling. I guess Wall Street’s heart grew three sizes that day.

But Sanders didn’t have the only theory. One super smart billionaire figured out that Saudi Arabia was the real problem:

Look at what’s going on with your gasoline prices. They’re going to go to $5, $6, $7 and we don’t have anybody in Washington that calls OPEC and says, “Fellas, it’s time. It’s over. You’re not going to do it anymore.”

When Donald Trump diagnosed this problem in 2011, his solution wasn’t just to “call Saudi Arabia” and tell them “you’re not going to raise that f***ing price!” No, he had a practical measure: seize Iraq’s oil fields. “To the victor belong the spoils. You go in. You win the war and you take it.”

It’s worth remembering this mass hysteria, although the situation today is somewhat different. The price of oil is below $30 a barrel. The International Energy Agency has warned that the world is now “drowning” in oil.

This week, the price for a particularly low-quality type of oil briefly dipped to negative fifty cents a barrel. That is, producers actually had to pay the refinery to take their oil. Has greed been abolished from the land? Maybe. But there’s also a sensible explanation: the high-sulfur oil is expensive to transport and refine, but the producers still had to get rid of it somehow.

But just a few years ago, it would have been almost unthinkable for refineries to actively discourage oil production. At $140 a barrel, almost any kind of oil is worth refining. And here’s the upshot: it was precisely those high prices that prompted the massive investment in production, exploration, and innovation that led to fracking, the shale revolution, and today’s tumbling prices. It was greedy, profit-seeking oil companies who drove the price of oil down over 80% from its peak in 2008.

It’s important to grasp these lessons now, because at some point, the price of oil — or some other commodity — will rise again, and we will be greeted by the same parade of doomsayers, conspiracy theorists, and would-be regulators that we endured for the last decade.

They’re not gone, they’re not even hiding — they’re leading the race for president.

Bonus economics of gas story: On Monday, local news in Michigan reported that a bidding war between a couple of gas stations briefly resulted in prices below 50 cents a gallon. To understand just how weird this is, the wholesale price of gasoline is about $1.

Is this another sign of irrational generosity sweeping the petroleum industry? No. Gasoline is retailed at razor thin margins; gas is typically about 70% of a station’s revenue, but only 30% of its profit. Gas stations actually make most of their money selling food, cigarettes, and bottled water inside.

Occasionally, gasoline is used as a loss leader: stations will sell gas for cheap (even at a loss) to bring people to the pump, where they can then make more money selling high-margin items like bottled drinks and tobacco.

Daniel BierDaniel Bier

Daniel Bier is the editor of Anything Peaceful. He writes on issues relating to science, civil liberties, and economic freedom.