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After Joe Biden’s strong move to free up oil reserves, China and OPEC warn of the consequences

Rumors of coordinated action drove crude prices down before the US announcement, but the international market rose more than 3% on Tuesday, when Washington confirmed it would use its strategic reserve and the market lacked clarity on the intentions of China.

Now, in addition to China, OPEC (Organization of Petroleum Exporting Countries) has ruled on the matter and warned of the consequences of the measure. OPEC estimates that the US-led release of oil from the reserves of major consuming nations will exacerbate a surplus in the global market in 2022 by 1.1 million barrels per day (bpd), a source from the group said.

The panel predicts that the oil market will have a surplus of 400,000 bpd in December, and that the surplus will expand to 2.3 million bpd in January and 3.7 million bpd in February if consuming nations follow through with their plans. to release reserves, the source said on condition of anonymity. The United States said on Tuesday it would release up to 50 million barrels of oil from its emergency reserves, in coordination with other injections of crude from the United Kingdom, China, India, South Korea and Japan, with the aim of cooling prices after that OPEC + ignored requests to pump more crude.

Demand for fuel collapsed early in the pandemic, but it has resurfaced this year and crude prices have risen, fueling broader inflation.

Biden, who faces low approval ratings ahead of next year’s Congressional elections, was frustrated after OPEC + ignored his repeated requests to pump more oil. Retail gasoline prices in the United States have risen more than 60% in the last year, their fastest rate of increase since 2000.

OPEC +, which includes Saudi Arabia and other US allies in the Gulf, as well as Russia, will meet again on December 2 to discuss the policy.

The group is monitoring whether oil markets are balanced, Iraqi Oil Minister Ihsan Abdul Jabbar said on Wednesday, adding that the group needs to study the latest data before making supply decisions.

Oil prices were little changed on Thursday, as investors watched as major producers responded to the oil release. Brent futures were up 7 cents at $ 82.32 a barrel. Meanwhile, the WTI contract was down 12 cents, or 0.2%, to $ 78.27 a barrel.

Source From: Ambito

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