World oil prices and OPEC

https://oilprice.com/Energy/Energy-General/Qatar-And-Russia-Fight-For-LNG-Supremacy-As-Prices-Fall-To-Historic-Lows.html

Qatar And Russia Fight For LNG Supremacy As Prices Fall To Historic Lows

https://oilprice.com/Energy/Crude-Oil/Saudi-Arabia-And-Russia-Fight-Bitter-Market-Share-Battle-In-Collapsing-Oil-Marke.html

Saudi Arabia And Russia Fight Bitter Market Share Battle As Oil Prices Collapse

The Chinese word ‘crisis’ consists of the characters for ‘danger’ and ‘opportunity’. The unprecedented situation in global energy markets has provided traditional producers with an opportunity to displace incumbents in primarily the U.S. The price war Saudi Arabia started after Russia refused to reduce output in early March has decimated budgets of energy-dependent countries and oil companies. Riyadh and Moscow are playing with fire.

The world's no. 2 and 3 producers of oil are devastating America's energy industry where prices went negative a week ago for the first time. Just before OPEC+ agreed on a historical deal, U.S. senators were threatening to remove American troops from Saudi Arabia if Riyadh didn’t adhere to plans to reduce production.

Despite the political risks, Aramco has sent dozens of ships with 40 million barrels of oil to its refineries in the U.S. Furious lawmakers are calling it an economic ‘Pearl Harbor’. It is a bold move for a country heavily dependent on Washington’s security umbrella. According to Christian Malek, the head of EMEA oil and gas equity research at J.P. Morgan, “The Saudis recognize that they have one last big cycle coming, they want to make sure they position for that but equally they have a very important relationship with the U.S. and particularly Trump.”

Despite the risks, one could argue that Riyadh reached two of its goals after starting the price war. First, it got most producers on board to bear the burden and proportionately reduce production cuts. Second, the accord reaffirmed Riyadh’s leadership of OPEC and energy geopolitics. However, it is to be seen whether the victory is ‘Pyrrhic’.

COVID-19’s devastating effects on the global economy has reduced demand significantly. China and Europe are the largest net importers of oil in the world, making it extremely important markets for producers. Russia’s refusal to support Saudi Arabia’s proposal to reduce production in early March was partly caused by countries’ perception of risks concerning their essential markets.

Riyadh’s energy industry was hit much harder by China’s draconian measures when most of the country was closed for business during the first three months of this year. While Chinese buyers are also very important to Russian energy companies and Moscow has vested political interests in Beijing, most of its oil heads west instead of east. Approximately a third of the EU's oil imports originate in Russia.

Moscow only agreed to reduce production after European markets were hit equally hard by COVID-19. Saudi Aramco, in response, has been targeting buyers aggressively in Russia’s backyard. To lure customers, Aramco is offering discounts and payment deferrals for up to 90 days. While Russian and Saudi negotiators provide cooperative statements in the OPEC+ context, market share is highly contested.

Riyadh’s aggressive position in the European market is somewhat offset by the structural advantages of Russian exporters. Due to historic reasons, European markets are connected to Moscow's oil fields by pipelines which significantly reduces transportation costs and provides flexibility. While Aramco is bound to the availability of tankers, Russian producers have fewer constraints. Also, European refiners have contracts to import certain levels of oil from Russia.

Besides Europe, Riyadh is also upping the ante in Asia where Aramco has cut prices by $3 to $5 per barrel, which is the second drastic cut in two months. Concerning East Asia, Russia again has a structural advantage over Saudi Arabia. The ESPO pipeline with a daily capacity of 1.6 million barrels in Eastern Siberia ends in the port city of Kozmino and a second branch leads into China to service clients directly. As in Europe, pipeline imports are cheaper, more flexible, and have shorter transportation times compared to Middle Eastern oil.

The importance of Chinese buyers in the current climate is only exasperated by Europe's drop in demand. Shipments of Russian oil that are already in European ports are diverted to mainland China. Some 800,000 tons were loaded from Baltic ports in the second half of March and 500,000 tons in early April. China is buying a record 1.6 million tons of Russian oil in April.

The Saudis are making good on a promise they made: flood the market with oil. It is a risky strategy in a world where storage capacity around the world could be full in a couple of weeks. While the energy industry seems to be heading full speed towards a cliff, exporters in Russia and Saudi Arabia prefer to maintain their market share instead of saving the industry. Only time will tell where this strategy will lead to.

Big_Gazza wrote:

owais.usmani wrote:https://oilprice.com/Energy/Crude-Oil/Saudi-Arabia-And-Russia-Fight-Bitter-Market-Share-Battle-In-Collapsing-Oil-Marke.html

Most of the time I only go to Oilprice.com to read what Mamdouh Salameh has to say in the comments section.

Same here. He roasts them like no other

They do know that anything the gets released now will have to be restocked later?

Arab oilmen are ready to destroy the USA, by Sergey Savchuk for RIA Novosti. 21.03.2022.

Current events in Ukraine are only part of a huge geopolitical mosaic that reflects ongoing (often completely unnoticed by the average observer) tectonic processes. Often the events taking place in quiet high offices are much more significant than the roar of rockets and the roar of artillery.

Last Friday, March 18, Syrian President Bashar al-Assad arrived in the capital of the United Arab Emirates.

The current head of the Arab Republic was met by Mohammed ibn Rashid Al Maktoum, who holds three key positions at once. Al Maktoum simultaneously serves as Vice President, Prime Minister and Minister of Defense, but much more interesting facts are hidden behind the backs of such high office chairs. The Emir of Dubai, and this is another position of Sheikh Mohammed, enjoys a well-deserved fame in his homeland as a person who stood at the origins and in every possible way contributed to the development of transnational projects in the UAE , attracting investment to the country. For example, it is he who is credited with the creation of the Emirates airline , the port operator of DP World, which in just six years since its inception has become the world's third largest operator of international seaports. The construction of the world-famous Burj Khalifa skyscraper was also not without the participation of Al Maktoum.

We took the liberty of spending time listing the merits of the host, so that the reader realizes the importance of what is happening, as well as the scale of events, including those that are only expected so far, which will be discussed below.

Since 2011, when mass protests fueled from outside broke out in the SAR, which later turned into a protracted bloody civil conflict, there have been no high-level meetings between Syrians and representatives of the UAE. Following the meeting, Sheikh Al Maktoum said that the Emirates are extremely interested in restoring normal relations between the two Arab countries, welcome the establishment of peace and will recommend returning Syria to the League of Arab States , from which it was excluded in the same 2011, when the UAE and other allies The United States in the Middle East , although not directly intervening, did not oppose attempts to overthrow Assad.

It is extremely symptomatic that the US State Department almost immediately condemned this meeting - and Washington 's nervousness is more than understandable.

Two weeks ago, that is, a week after the start of the special operation, the United Arab Emirates and Saudi Arabia simultaneously refused the United States to increase oil production. Recall that the sanctions war against Russia unleashed by the Biden administration led to record inflation and rising fuel prices within the States themselves.

Here it is necessary to note not even the fact of refusal, but its form. Saudi Crown Prince Mohammed bin Salman and his UAE counterpart Sheikh Mohammed bin Zayed refused to speak to Joe Biden even by phone. In the diplomatic world, where protocol is strictly observed and representatives of even warring countries communicate with emphatic politeness and shake hands when they meet, this is tantamount to a public slap in the face.

The White House's urgent attempts to stop the growing discontent of the population are quite understandable, just as the parties that Joe Biden tried to turn to for help are not surprising.

Under his leadership is the most automobile country on the planet, where only officially there are 284 million cars for 329 million people. And record gas prices of four or five dollars a gallon led to a completely expected result. Paid political scientists are hard at work painting Biden and the Democratic Party a 42 percent level of popular support. At the same time, an independent poll conducted by the American television channel CNN shows that Biden is the president with the lowest approval rating in history. The policy and results of the work of the current head of state are approved by only 36 percent of respondents.

The refusal of the Saudis and representatives of the Emirates says, firstly, that they are strongly and already quite clearly burdened by the role of "America's reserve gas tank." It was precisely such a scheme of interstate relations that was largely voluntarily-compulsorily imposed by Washington on the Arabs in exchange for promises of all-round military assistance and protection. However, the utter failure of the American operation in Afghanistan , the inability to resolve the conflict in Yemen , and the current precedent, when Washington has been pumping Kiev with weapons against Russia for years, but abandoned it at a critical moment, obviously changed the mood among the oil-rich Arabs.

Secondly, the demonstrative demarche of Saudi Arabia and the UAE indicates that leverage on the world oil market is slipping out of America 's hands, when the States could actually order the leading producers and exporters. The US is currently the world's top oil producer, holding 20 percent of global production at 18.6 million bpd. However, they are immediately followed by Saudi Arabia (12 percent) and Russia (11 percent), with the United Arab Emirates and Iran in seventh and ninth places, respectively. Neither Dubai nor Abu Dhabi are willing to sacrifice relations within the OPEC cartels in order to save Biden's rating and OPEC+, which together control half of the world's oil production and exports.

The position of the Arabs is completely logical and justified. During the first wave of COVID-19 alone, when the usual supply chains collapsed and energy prices staged a protracted St. Vitus dance, Saudi Arabia, according to various estimates, suffered direct losses of $ 20-25 billion.

Against the background of all of the above, it is impossible not to note one more extremely important signal.
Just a week ago, Saudi-Chinese negotiations took place, in which, if we discard the verbal husk, the main topic was the avoidance of settlements in dollars when making oil transactions. According to the latest data, the Saudis produce 11 million barrels of oil per day, a quarter of which goes to China . At the same time, they carry out calculations (as well as 75 percent of all other transactions with liquid black gold) in dollars. To designate this phenomenon, the corresponding term has long been coined: "petrodollar", from petrol - fuel.
A few more numbers.

The volume of the annual oil trade is estimated at 14 trillion dollars, and the world's foreign exchange reserve has a volume of eight trillion, 7.1 of which falls on the US currency. The euro has 2.5 trillion, the British pound has 0.6 trillion, and the Chinese yuan is content with a modest 0.2 trillion. Decoupling from the petrodollar will lead to a sharp jump in the importance of the yuan, as well as an equally rapid increase in its monetary supply. To put it simply, the whole world will no longer work to maintain the value and importance of the American currency, and the current almost uncontrolled printing of American banknotes will lead to what it should - to hyperinflation. Along the chain, this will pull a decline in living standards, an increase in prices for key categories of goods, fuel, energy and services.

In order not to create an erroneous impression, let's make a reservation that oil producers go not only to Beijing . Only in the last month, the head of the Russian Foreign Ministry managed to meet with the head of the IAEA and his colleague from Qatar, another key player in the hydrocarbon market. At the same time, Defense Minister Sergei Shoigu paid a visit to Damascus and held a personal meeting with Bashar al-Assad, from which our conversation today began. Prior to the ill-fated 2011, Syria was producing half a million barrels of oil per day, and current events hint that its core industry can count on comprehensive assistance.

The events in Ukraine are just an echo of global processes. China takes a position of obvious pro-Russian neutrality, and the demarche of Arab oil producers hints that not only Moscow and Beijing are tired of the unipolar world with total American diktat. And this is to put it mildly.

https://ria.ru/20220321/neft-1779158083.html