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DESPITE the rise in COVID-19 cases with the emergence of its two variants, as well as the lockdowns and restrictions in travel movements, the oil sector performed well with the best gain in oil prices at $76 a barrel. The full credit for this goes to the close coordination between Saudi Arabia and Russia – the two major oil producers and exporters – in forming OPEC-Plus. This new coordinating oil body serves both oil consumers and producers equally to the benefit of the global economy. It managed the oil supply to the closest barrel in terms of knowing the location of every barrel. From the beginning of the pandemic, OPEC+ began to coordinate and view the supply, meeting at the same time the unstoppable demand of the USA, which is the biggest oil consumer.
One day the US decreased supply to help its domestic oil industry from collapse and bankruptcy, and the next year, it pushed for more volume of oil to satisfy its home base voters for future elections. Both were done with some sort of threat or using strategic reserve to dampen the oil prices, but it neither happened nor was the price affected. In fact, it hardened the prices.
The new oil organization should be given credit for its smooth operation in managing the oil supply globally, unlike the old international majors that used to play politics and overthrow/topple governments by creating civil unrest, simply by stopping oil uplifts from one country and maximizing them from another neighboring countries, with the full knowledge that the majors own western governments. In most cases, they did succeed in changing the full establishments from being forced out of their native countries.
Today, oil is placed in better hands with the participation of 23 oil-producing countries with different production levels and with various levels of annual income and various sizes of population. Nevertheless, they all meet to achieve one big objective in creating stability, and harmony for the global oil market and achieving an acceptable level of oil price, but within a reasonable range of $ 65-80 a barrel or $72.5, while monitoring oil supply to ensure adequate supply globally. As a result, last year was a good year for all. We hope it will remain so this year too … And it will.
By Kamel Al-Harami
Independent Oil Analyst