OPEC+ – the united front

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THE unity within the oil organization, since the arrival of the biggest oil producer, resulted in a higher oil price of almost $100 per barrel in no time. The current level of $94 is a comforting figure and represents good news for OPEC+ due to its efforts and solidity. The USA, which is the biggest consumer, is unable to do anything at this time, as it has used all of its tools, including its strategic reserve. It has reached the lowest level within a period of more than 40 years, having used 350 million barrels already.

Kamel Al-Harami

Oil is currently too expensive to buy, which will result in a further escalation in the barrel price. In addition, the global oil demand is reaching more than 103 million barrels per day, which is in turn tightening the market supply with the oil organization restricting its throughput in its effort to calm down the demand if possible, avoid further escalation in inflation, and dampen the future demand for oil.

This of course could lead to a shortage of oil, with OPEC+ being the only available source of supply. The united front of the oil group is largely due to the arrival of Russia after it agreed to join the oil organization following years of persuasion by Saudi Arabia. Now we are witnessing full collaboration and commitment that we have never seen before. Russia has committed to voluntary cuts of 500,000 barrels until the end of the current year. The next step that OPEC+ should take is to preserve and maintain the price levels to cover its investments in new oils, exploration, transportation, pipelines, and other expenses. This will result in a balanced budget by the end of the fiscal year for OPEC+.

This should be its oil policy, as it should not exceed $100 a barrel in order to meet the future demand, which will go over the current level of $103. It should be prepared for this, as other oil producers are not investing with the main intention of cash-back, dividends, and reinvesting in their entity, thereby passing to OPEC+ the duty of investing in more oil discoveries. The united front should stay, and its members should be rewarded with returns that have been long awaited.

By Kamel Al-Harami
Independent Oil Analyst

email: [email protected]

This news has been read 1453 times!

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