Oil Price Rises again, after the sharp fall on Wednesday

Crude oil price on Thursday, March 10

The price of crude oil that fell almost by 11% on Wednesday appears to be gaining momentum again in the upward direction.

As of 14:45 GMT, the price of WTI and Brent were $109.68 and $112.89 respectively.

The price of crude oil that went past $130 on Wednesday, fell sharply in the evening, partly, in hope that the OPEC+, led by the UAE and Saudi Arabia, would step in to stabilize the market. 

The precipitous fall that stemmed from the false dawn has been attributed to a statement by the Ambassador of the UAE to the US: "We favour production increases and will be encouraging the OPEC+ to consider higher production levels," said he in it that took the crude the oil markets by surprise.

Up until then, the position of the analysts in the oil and gas realm was that the OPEC+ was not going to do the US bidding - or that of President Biden, for that matter - in order to tackle the energy prices that go through the roof at the moment.

There were even press reports that both the Crown Prince of Saudi Arabia and that of the UAE even refused to pick up the phone when President Biden rang - an unusual development, if true.

Since President Biden took office, the relations between the US and the UAE have been frosty; the relations between the US and Saudi Arabia got even worse, when the former removed Patriotic anti-missile system, which used to protect the Kingdom from Houthi missiles and drones on daily basis; Saudi Arabia was forced to burrow missile batteries from places like Greece in order to keep the threat of missiles at bay.

On Thursday, however, a single Tweet by Suhail al Mazrouei,  the energy minister of the UAE quashed the hope of markets having enough crude oil: "The UAE believe in the value OPEC+ brings to the oil markets," said Mr Mazrouei, while adding, "that the UAE is committed to the OPEC+ agreement for the gradual increase of oil production."

Of course, it is not something that the US administration wants to hear about; the OPEC+, however, seems to be determined to stick
to the gradual increase in production; the cartel gives a clear message to the Western policy makers that the former it not for turning. 

Political analysts believe that the Emirati Ambassador to the US may have made the remark yesterday, having come under enormous pressure from the US administration.

With the anticipated OPEC+ production rise in limbo and no success in reviving the JCPOA, 2015 Iranian nuclear deal, there is not much that the Biden administration can do to alleviate the grievances at the pumps - and beyond.

The presidential pressure is all too clear when he told reporters, on being asked about the rising oil price, he cannot do much about it and blamed it on Russia.

It is true that President Biden can do very little to contain the rise in crude oil prices. On one hand, he cannot encourage digging up more wells in sharp contrast to campaign promises; on the other hand, the options he has at his disposal to increase the supply are very limited.

President Biden is not the only one who feels the frustration. The president of the US oil and gas federation summed up the mood in the industry when he berated, "Cut the c*** and approve our permits," while seeing the failure to address the issue head on. 

Since the rising energy costs affect both sides of the political divide equally, the US and the West may be compelled to talk to Russia in order to bring the unfortunate events in Ukraine to an end - ultimately.

 

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