Thread on #OPEC meeting #OOTT
1- This forthcoming OPEC+ meeting on Wednesday is going to be held under the biggest political crisis since OPEC+ has been initiated.
The optimal outcome is a short meeting where they stick to the plan unless Russia wants to increase production.
1- This forthcoming OPEC+ meeting on Wednesday is going to be held under the biggest political crisis since OPEC+ has been initiated.
The optimal outcome is a short meeting where they stick to the plan unless Russia wants to increase production.
2- If it was not for the Russian-Ukrain issue, one would argue for an increase in the group's ceiling, which ultimately means higher production by those who can increase production. In a sense, it legitimizes these increases.
But that comes with a risk of angering some members
But that comes with a risk of angering some members
3- The increase can be justified by curbing a sharp rise in oil prices. Saudis can also justify adding the voluntary cuts that they made in the past. After all, the planned increases were eliminated or reduced in the past, now they can use the same logic, but in reverse. #OOTT
4- The US views high #oil prices as a threat to national security if high oil prices limit its options dealing with Russia. Therefore, the administration would do whatever it takes to reduce oil prices. It is clear that their choices are limited.
5- Russia did not want oil prices above $65 for purely economic reasons. Now they see a tremendous political value to high oil prices. With high oil & gas prices, Europe's leaders and the Biden Administration are stuck.
So Biden wants lower prices, Putin wants higher prices
So Biden wants lower prices, Putin wants higher prices
6- Gulf states are also stuck: Russia is part of the OPEC+ and provides tremendous benefits to the group.. at the same time they do not want to anger Europeans and the Americans. The safest choice is to stick to the planned increases for now.
7- If Russia invades Ukraine and its oil exports are reduced in one way or the other, will Gulf states compensate? While it is everyones' guess at this stage, the incentives for Gulf states to increase production are not there. Biden has to give an arm and a leg to win them back.
8- Finally, if Putin gets cornered, will he cut natural gas supplies to Europe? I leave that answer to you.
- I agree with experts that there is no additional gas to compensate. It will be a zero-sum game. Whatever gas diverted to Europe will be at the expense of other countries
- I agree with experts that there is no additional gas to compensate. It will be a zero-sum game. Whatever gas diverted to Europe will be at the expense of other countries
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