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Oil Price may hit above $70 soon: OPEC+ will not buckle under pressure

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  With the latest OPEC+ decision, which was a foregone conclusion anyway in light of the enormous power that Saudi Arabia wields in the organization, the crude oil price started rocketing on Friday, despite the substantial increase in crude oil stockpiles in the US. Usually the US crude oil stockpiles is a reliable indicator when it comes to determining the price of oil; the higher it goes, the lower the price becomes. This time, however, the crude oil price defied the rising crude oil inventories while adding yet another surprise to the spectacle of crude oil price fluctuations. If the trend continues into next week, the price of crude oil, both Brent and WTI, will go beyond $70 a barrel; it will certainly be reflected at the pumps when you go to fill the tanks. In the United Kingdom, motorists already feel the significant rise in price at service stations, having been unable to put their vehicles on the roads when the price plummeted at the pumps – for obvious reasons. Worl

OPEC+ Meeting: production levels are going to remain the same with an exception for two members

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  OPEC+ meeting ended on Thursday with Saudi Arabia reasserting its position as the shepherd of the block by leading the flock facing very little resistance against achieving its desired goal. Saudi oil ministers are renowned for going poetic whenever they wanted to add extra weight to the points they love to make; in this context, HRH Prince Abdulaziz bin Salman Al Saud, is no exception. At the outset of his speech he used two similies, in order to dramatize the position of Saudi Arabia to the global audience: “Let us be certain that the glimmer we see ahead is not the headlight of an oncoming express train.” This is the position maintained by Prince Abdulaziz, long before the crucial meeting on March 4; since most members agree with him at the meeting, Saudi Arabia had clearly done the homework before publicly declared its intentions; Saudi officials had persuaded the members of the OPEC not to act on impulse by just focussing on the rising crude oil price at the expense of hid

Oil Price and Production Cuts: markets watch the outcome of OPEC+ meeting

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  With just less than 24 hours to go before the crucial OPEC+ meeting, oil price showed a modest increase, reflecting the general mood in the markets that supply floodgates will not open anytime soon. With the chasm between Iran and the US widening in the face of attacks on US interests in Iraq by Iran-backed rebel forces, the Iranian factors in realm of oil markets slowly pales into insignificance; Iran’s stubborn position on the nuclear deal does not make the process of sanctions being lifted any more realistic either. That means the markets will not get crude oil in excess in the current circumstances and the trend in prices reflects just that. Since a drastic output cut is not a universal view among the members of the OPEC+, they may agree on a coordinated production ‘adjustment’ until next meeting in April; this is what markets sense and hence the understandable reaction across the crude oil markets for all to see. At the same time, the more dominant members of the OPEC+ c

OPEC+ Under Pressure from Major Consumers in Asia before Meeting on March 4

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  With just 2 days to go before the next crucial OPEC+ monthly meeting, the main players in the cartel are under increasing pressure not to extend their output cut for another month. India, for example, the world’s third biggest consumer, asked the organization not to resort to what it called, ‘artificial cuts’ in order to boost the price. This is not the first time that India expressed its displeasure over the production cuts by the OPEC+, as it affected the prices at pumps significantly in recent weeks; it could potentially derail the slow recovery of the Indian economy that suffered the worst recession in 70 years. Of course, OPEC+ has its own interest to pursue, having being caught up in a downward spiral of plummeting oil price. At the same time, it cannot completely ignore the grievances of its most important customers. In China, the second biggest consumer of crude oil in the world, meanwhile, there is news regarding a drop in production growth in February. If the trend

Rising Oil Price: world's third largest consumer feels the pinch

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  The rising oil price has already affected the world’s third largest consumer of crude oil, India, both economically and politically. During the last six months, fuel price has gone up by a staggering 23%, taking its toll on the freight operators with a significant rise in the cost of rentals. Since most of the internal transport of goods depend on trucks on   networks of highways in this vast nation, the cost of goods for ordinary people is going to skyrocket in the far away regions, if the fuel hike continues at this rate – in proportion to the obvious increasing transport cost; India population is mainly rural and how they live – and spend - really matters when it comes to its economy. Indian economy that showed an impressive growth for decades suddenly came to a screeching halt due to the pandemic; for the first time in 70 years, it went through its worst recession. Although, it is showing the signs of a feeble recovery, the rise in the price of fuel on recent scale could

Oil Price: does this the graph play a major role in its rise?

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  Oil price is rising and even an inventory hike did not affect its elevation to the current level this week. It went down at the early hours on Friday, most probably after the news about an air strike by the US inside Syria, targeting a group of fighters supported by Iran. Although the attack did not have the potential to trigger off a regional conflict, it affected the market sentiment in Asia in the early hours – hence, the drop in price. Since its impact died down by Friday evening, the oil price may rise again when the markets are open next week. One of the main catalysts for the buoyancy in the crude oil markets, in this context, seems to be the forecast by the EIA, the US Energy Information Administration that shows a steady decline in US crude production. Ban on fracking in Federal lands only makes it more relevant as far as crude oil futures are concerned. The analysts at the OPEC+ may be dissecting this graph as if it was a live specimen in order to read into the cr

Oil Price: dynamics of the crude market with Iran back to the fold

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  Although the hardliners of the Iranian administration are determined not to revive the nuclear deal signed in 2015, the moderates, led by President Rouhani, appear to be getting their way. On the part of the US administration, the indications are that they will do everything to revive the deal even if that means caving into some of Iranian demands, if not all. The bone of contention will be over how to compensate for the loss of revenue by Iran due to crippling sanction imposed by the Trump administration. A plane load of cash this time, however, as it happened in 2015, will not be political candy that can sell very well to the American domestic audience regardless of the political affiliations. As far as Iranian oil industry is concerned, the moves are underway in hope that sanctions will be lifted in the near future. By reading between the lines of their official communiques, both the US, European Union and other stake holders are keen on getting Iran back to the fold; the

Oil Price: next OPEC+ meeting on March 4 - will Russia and Saudi Arabia see eye to eye on production cuts?

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  In spite of the rise in oil price, defying the forecasts that said otherwise, Saudis have been urging the members of the OPEC to be cautious. We do not know for sure whether the Saudis knew the dip in price this week in advance – by instinct or from a model that the rest of the analysts are not aware of. Up until this week, Saudi Arabia got it calculations right and they deserve the credit for it: their strategy worked perfectly well and OPEC members could breathe a long, collective sigh of relief in proportion to the rise in oil price. In the past OPEC+ meetings, Saudi Arabia was instrumental in bringing down the crude production by the members of the OPEC+, while dwarfing the murmurs that favoured the polar opposite.   Then, they went even further on their own with a cut of 1million bpd for February and March. In short, the global output was substantially slashed. Oil price, meanwhile, rocketed as a result and the OPEC members could not believe their luck: having faced with

Crude Oil Production Cuts: murmurs of discontent

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  At present, OPEC+, the Organization of Petroleum Exporting Countries plus Russia, resembles an unstable nucleus of a radioactive atom; judging by what we hear on political front, there seems to be uneasy compliance with self-imposed quota-limits with murmurs of cacophonies.   Although crude price dipped slightly over the past two days, it is still high and countries that desperately need petro cash to prop up under-performing economies are deprived of a once-in-a decade opportunity to cash in on the fortune. These nations, exactly like sub-atomic particles in an unstable nucleus, do make subtle manoeuvres in seeking unknown freedom, while securing their positions within where they belong to – the crude oil cartel, in this case. The current predicament of Iraq is a case in point. Bloomberg reported this week that export of crude oil by Iraq in the first half of February was higher than what was permitted by the loose-agreement by the OPEC+. If officially confirmed, not only

Critical Problem with Renewables: they are not at your beck and call

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People in Texas are suffering at present on an unprecedented scale and when the city mayor shot himself in the foot, while the response should have been a shot in the arm – not in vaccine sense – it hardly helps to boost the morale of ordinary people, let alone the vulnerable. Clearly, the demand of electricity has outweighed supply and the risks of wind power as a substitute are there for all to see. How many of us saw this coming – the frozen wind turbines? I certainly is not one of them. Since the energy provided by wind turbines in Texas rose from 11% in 2015 to 23% in 2020, i.e., almost a quarter of the state’s need, everyone talks about the impact on it by the frozen wind turbines for valid reasons. Even the website of those who manage the electricity supply cannot be accessed right now, citing security; it’s like remedying diarrhoea with a tight pamper. Over 2 million people are affected it’s just outrageous to ask people to fend themselves and to be told, ‘no one owes y

Oil Price: what will happen when planes are back in the skies?

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  Having risen steadily – and somewhat alarmingly – for more than a week, Brent crude price has slightly gone down for most of the day on Tuesday. Major oil producers in the OPEC, meanwhile, still think the price of the crude oil is in the right range as far as their economic issues are concerned, thanks to the output cut. The minnows in the organization, however, do not see it that way and reluctantly agree with cuts; they want to sell as much oil as possible and earn revenues as a matter of urgency, but their room for manoeuvre is severely restricted by the organizational obligations; Nigeria is a case in point. Against this backdrop, analysts are keen on following the next month’s meeting of the OPEC+, as the outcome of these monthly meetings happen to be the single most significant factor in determining the crude oil price. The relative success of vaccine programmes, meanwhile, is bringing the traffic back on our streets despite lockdowns – and the outbreaks of new variants

Early morning crude oil price hike: it was due to a drone attack!

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  At 04:27 GMT on Monday, Brent crude price went up by $1.09, a rise in 1.8%. WTI crude, meanwhile, gained $1.28. Analysts may think the stimulus package announced by the Biden administration and the hopes of success of the vaccination programmes across the world are behind the spike in crude price in the morning hours in Asia. It, however, was triggered off by a drone operation aimed at Saudi Arabia by Houthi rebels. According to Saudis, a drone, laden with explosives, was detected by the Saudi interceptors on Sunday night; they say it was destroyed on detection in the Saudi skies. This has been the pattern whenever Houthi drones are detected in the Saudi airspace; analysts are more worried about the potential for a flare-up between Iran, the backers of Houthi rebels, and Saudi Arabia. Since the drone was destroyed by Saudi Arabia before it damaged the intended target, markets breathed a sigh of relief and the price movements since then reflect the trend. Asian shares rose rap

Relying on the renewables for power: challenge of still, dark days

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On Boxing Day in 2020, we were mostly indoors due to the lockdown over the Christmas period in the United Kingdom; nature hardly helped alleviate the gloom during the difficult time either in the hour of national need; on the contrary, its fury developed into a monstrous storm, knows as Storm Bella, which relentlessly battered the British Isles. Being true to the clich̩, the dark clouds did have a silver lining as far as the camp of renewables was concerned; the winds of Storm Bella, with gusts up to 100 miles per hour, played its role to make history in the United Kingdom; more than 50% of the electricity needs of the country came from wind power on Boxing Day Рfor the first time ever. Although it is a cause for celebration as far as the renewable sector is concerned, the inevitable challenges were not eclipsed by the technological feat; to put it simply, it was a random wind speed that did the trick rather than the human quick thinking in harnessing the wind power on this occasion.

Oil Price:all ears on the next OPEC+ meeting in March

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  The next monthly meeting of the OPEC+ on March 4, is going to be crucial for the oil price in particular and the economies of the world regardless of their strength in general. At present, the factors which are always in favour of steady oil price are active: the inventory draws are significant; China has been importing crude oil at an increased pace and so has India; Covid-19 vaccines bring in new hope for controlling the pandemic. In this context, OPEC+ can play the decisive role in the equation of crude oil price very soon. According to Ihsan Abdul Jabbar, the Iraqi oil minister, the OPEC+ will make sure oil supply is steady for the coming months; whether he meant up until next month after March, i.e. April, or beyond that remains to be the collective decision of the cartel. Iraq may agree with the rest of OPEC+ in order to maintain an output cut so that it can boost revenue to shore up its struggling economy; the political unrest is at a critical point in the country, whi

Why do the UAE and Saudi Arabia embrace renewables? Reason is not whay you think!

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  Both the UAE and Saudi Arabia, two countries without an issue of crude oil supply, are in an accelerated mode to embrace renewable energy, something we never heard of, up until recently. According to an article by Rystad Energy on oilprice.com, the UAE hopes to increase the contribution by the renewables to its energy needs to an impressive 21% by 2030; the UAE is rapidly expanding the installation of solar panels in the desert to achieve the targets and unlike in Europe, it’s a reliable renewable source to generate energy most of the year for the region. The article also highlights the impressive fact that in the UAE, the consumers enjoy the lowest electricity tariffs in the world. Having seen the article, I asked a friend of mine, who is on the same wavelength when it comes to the subject, as to why these two nations, with estimated vast oil reserves, embark on a highly ambitious renewable mission: “Because, they will run out of it much earlier than they say it will,” came th

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