As the global economy recovers from the Covid-10 pandemic, the OPEC + oil producer alliance is set to meet next week.
Saudi Arabia, the group’s leader, had reduced crude oil production during the pandemic’s last 18 months.
Saudi Arabia is expected to pump nearly 9.8 million barrels per day this month, as a global economic claim in energy supply recovery.
By recovering these shipments slowly enough to avoid a new surplus, Saudi energy minister Prince Abdulaziz bin Salman has restored crude oil prices to $80 per barrel.
This extended the kingdom’s oil revenues for a maximum of three years, putting them on track for a larger paycheck in 2022.
“OPEC has had a very good year,” said Ben Luckock, Trafigura Group’s co-head of oil trade. “They’ve delivered: they’ve threaded the needle.”
This is a far cry from the upheaval of last March, when a drop in fuel demand briefly threw the Organization of Petroleum Exporting Countries and its partners into a brutal battle for customers.
As the network of 23 nations, led by Saudi Arabia and Russia, prepares to meet on Monday, these painful memories seem distant.
If there is a risk to the delicate balance that OPEC + has achieved, it is that the market will overheat and prices will rise excessively.
By approving an increase of 400,000 barrels per day for November, the alliance has indicated that it will stick to its schedule of modest production increases. However, the market has shifted since this roadmap was agreed upon in July.
Natural gas scarcity, which has driven prices to $ 190 per barrel, is driving a shift to petroleum products for heating and manufacturing, increasing global demand.
The United States’ oil production is still recovering from Hurricane Ida, which destroyed nearly 35 million barrels after shattering the Gulf of Mexico a month ago, which is equivalent to nearly two months of rising the OPEC + offer.
Some OPEC+ delegates have privately stated that the increase approved at Monday’s meeting could exceed the projected 400,000 barrels per day. One official has considered the possibility of higher increases.
According to people familiar with the idea, the Saudis do not want oil prices to reach $100 per barrel because high fuel costs would reduce demand and stimulate the reactivation of American shale production.