According to folk wisdom, we were few, and the grandmother gave birth. In the midst of the energy crisis caused by Russia’s invasion of Ukraine, which is bugging us with inflation, electricity and transportation prices, it turned out that there is a group of countries led by Russia and Saudi Arabia known as OPEC+. decided to cut oil production by two million barrels per day (2% of the total) to anticipate the recession that awaits us all next year.
It’s normal for Russia to do this. It lives off its oil and gas exports, which has been heavily affected by the sanctions it has suffered as a result of the disastrous (I dare not write sloppy but I really want to) occupation of Ukraine. This is normal, because Russia will no longer be able to export 77% of its gas and 40% of its oil to us (41% and 25% of our imports, respectively) and it will not be easy to find alternative customers to absorb it. Although India and above all China are taking advantage of brazenly increasing their purchases by mandating significant price cuts. Now there will be less oil on the market, and Russia will be able to sell its more expensive oil, and with that money it will finance the massive military effort it has made in Ukraine – with little success so far. This rise is of great interest to Iran’s ayatollahs, who, after the death of Masha Amini (strongly suppressed), with the large number of protests (strongly suppressed) in need of good news for their suffering populations like rain in May, and also in Iran. Many other small producers, and many of them – like Algeria before they go any further – need $90, as they see with growing concern how prices have dropped from last August’s high ($120/bbl) to 80 a few days ago. do your calculations.
What is less clear is that Saudi Arabia and the United Arab Emirates are happily joining the party because, although the increase benefits them as well, they are among Washington’s main allies in the Middle East and the largest buyers of weapons, including the F-35. . the most modern weapons on the market, weapons used in the war in Yemen.
As such, it was a real slap in the face for President Biden, who went to Riyadh in July and asked Mohamed bin Salman (MbS) to increase production to compensate for the outflow of Russian oil. The increase in the price of gasoline is hurting US Democrats more than anything else in the midterm elections in November, when nothing is at stake except protecting (or losing) the House of Representatives and the Senate. There’s a lot of tension in Washington these days, and Biden has already announced measures against Riyadh…
I say Biden bit the bullet because it must have been hard for him to go to see the Saudi prince, whom he called an international “pariah” a year ago, as he blames himself for the brutal dismemberment of journalist Jamal Kashoggi in Istanbul. his intelligence services are something no one dares to do without orders from above. And now MbS is putting it in a tight spot, not only increasing its oil production, but decreasing it, and that shows better than anything else that the US is no longer what it is in the Middle East. It had three goals there: to get oil in quantity and at an affordable price, and now it’s self-sufficient thanks to US fracking; protect Israel, which now guards itself so well; and third, to prevent Russia from entering the Middle East, something Washington has failed to achieve because it has cut cod in Syria. The vacuum created by its withdrawal in the region is being filled by Russia, Iran and Turkey, and regional countries are drawing attention by seeking other allies such as Russia and China. How could it be less? The current cut in oil production is the result.
The other news for us is bad because companies are predicting an increase for heating and gas stations, thus contributing to the tough autumn/winter that awaits us.