Showing posts from March 28, 2021

Oil Price: can India weaponize its significant market position?

  With the decision by the OPEC+ to increase the crude oil production for three months – May, June and July – the concerns about the supply side of the oil equations seem to be subsiding faster than the markets thought they would; the geo-political fallout, however, is far from over. Up until the end of the OPEC+ meeting on April 1, the indications were that the cartel would agree to extending the existing production cuts for two more months, citing the outbreaks of new Covid-19 infections and subdued demand; when the news of the polar opposite became known in the end, lots of analysts refused to believe it, thinking it was a sort of prank that usually is associated with this particular calendar day - for innocent amusement. Although Saudi Arabia did not account for the change of heart at the eleventh hour during the latest monthly meeting of the OPEC+, despite maintaining the stance of exercising caution, the unexpected call from the US Energy Secretary may have been a game-change

Easing Oil Output-cut by the OPEC+: did pressure from India and the US determine the outcome?

  The OPEC+ defied the expectations of the analysts on Thursday, April 1, by agreeing to increase production for May, June and July. The rise in output will be 350,000 bpd for May and June; for July, the output will be increased further by 100,000 bpd. In addition, Saudi Arabia will roll back its voluntary cut of 1 million barrels a day, while increasing its contribution for the same period by 250,000bpd, 350,000 and 400,000 respectively. Saudis maintained their position, the need of exercise caution, right until the monthly meeting of the organization. They, however, changed the position before the end of the meeting that resulted in the unexpected – increasing the output for three months. Up until the final communique was issued, mixed signalS were streaming from the sources connected to the OPEC+. The OPEC+ has been under pressure from many countries for cutting down on the output, purely for inflating the price. India has been at the forefront of the tidal wave of critici

OPEC+ Meeting on Oil Production: only a miracle will change the status quo

The next meeting of the OPEC+, the Organisation of Petroleum Exporting Countries plus Russia, on April 1, does not seem to be boosting the market enthusiasm unlike on the previous occasions. The muted response stems from the fact that Saudi Arabia, the de facto leader of the organization, is stubbornly maintaining its well-known stance when it comes to increasing the production – exercising caution rather than appeasing the aspirations of the crude oil customers. On that basis, there may not be a major announcement tomorrow from the cartel; nor will there be any production rise. In order to keep Russia on-board, however, the OPEC+ will let Russia – perhaps, Kazakhstan too -  increase its crude oil production by a modest amount, as they have done on two previous occasions. With such moves, the organization, particularly Saudi Arabia, is going to invoke the wrath of its major customers in Asia, especially India. The relations between the two countries have soured during the last

Crude Oil Price after Suez Saga: price fluctuates, but market sentiment remains positive

  As the Suez Effect has died down, the oil price seems to be heading towards its equilibrium – the position it generally held before the maritime incident; it’s premature to call it a crash, though. It is true there is a serious risk of some European nations going back into lockdown; there are relatively success stories too in the battle against the Coronavirus in the continent. In the United Kingdom, for instance, the success of vaccine rollout continues despite the concern raised about some side effects of the vaccines. In direct proportion, both the death rate and that of infection have plummeted; for the first time, London reported zero deaths on Sunday since the first lockdown. Although the people in the United Kingdom are not out of the woods yet, the restrictions have been eased in hope individual civic responsibilities will be fulfilled by the masses without leaving the authorities in a lurch; the restrictions on the movements may be eased too beyond local areas. In li

The Suez Factor: oil price drops; the rate of fall slows down

  As the news spread about the partial success of refloating the megaship, Ever Given, the oil price went down in the early hours of Monday; the rate of drop, however, has slowed down in proportion to the angle of rotation of the vessel as if there was a mathematical correlation between the two. On Sunday, the hope of success just vanished into the thin air, as the Japanese firm, which owned the ship, made a doomed a prediction on Friday that the waterway would be cleared for navigation by late Saturday, but to no avail. At present, the ship has been refloated 80% with the rest of the mission being the more difficult phase, according to the Dutch company that is involved in the salvage operations: he implied that the rest of the operation, more or less, is at the mercy of nature; despite the use of state-of-the art machinery, the operators still have to wait for the tide to complement its ‘job’; in fact, a spring high tide on Sunday night immensely helped the operation to get to th

Oil Price and Lingering Suez Factor

  The container ship that has been stranded in the Suez Canal since Wednesday has moved about 100ft into the middle of the canal from where it was, according to the latest report. When it’s going to be at the centre of the canal, however, is anybody’s guess at present; it appears to be much complicated than originally thought, due to its sheer size, length and the weight of its cargo. As the gap between one end of the ship and the bank of the canal is not very wide, the salvage crews have been forced to go at a slow pace – for obvious reasons. As the last resort, meanwhile, Egypt’s President Abdel Fattah el-Sisi, has ordered the Egyptian authorities to lighten the ship in order to make it movable easily; if everything else fails, they may be compelled to go for the option despite multiple disadvantages it poses. If the Egyptian authorities decide to go ahead with the plan, although it makes sense in the protracted operations without an end in sight, the process will take days t

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