Why the OPEC+ Crisis Has Sparked an Oil Price Frenzy: Quicktake

Bloomberg2021-07-08

A year after rescuing the global oil industry from the ravages of the pandemic, the OPEC+ alliance has been thrown again intodisarray. The group of crude producers has split at its core, after a ...

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Comments

rogue66
2021-07-08
rogue66
Up
Cheryi
2021-07-08
Cheryi
Ok
SandDust
2021-07-08
SandDust
The longer they keep underground, the less worth those crude become
TSLAtothemoon
2021-07-08
TSLAtothemoon
Pls give like
cryptous
2021-07-08
cryptous
Like and comment
- Sim1:
  Done
- 627ac981:
  Sure
Godchok
2021-07-08
Godchok
Ooo

Leave a comment

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The group of crude producers has split at its core, after a bitter feud flared up between long-standing allies Saudi Arabia and the United Arab Emirates over how quotas should be calculated. Prices have swung as their standoff threatens to deprive markets of the supplies needed to feed the world’s economic recovery. If the deadlock remains unresolved, it could have profound consequences for the balance of power in the Middle East and energy companies around the globe.\n1. What is OPEC+ fighting about?\nThe Organization of the Petroleum Exporting Countries and its partners have been gradually restoring to the market the vast quantities of crude they halted when the coronavirus crushed fuel demand in 2020. Its plans to revive the barrels that remain offline have run into a snag: the UAE will only approve Saudi proposals to phase in the restart to the end of 2022 if its individual target is recalculated. Abu Dhabi, capital of the UAE and seat of most of its oil production, says the quota is outdated and unfair.\n2. What has the pandemic done to OPEC+?\nIn March 2020, OPEC+ was plunged into a brutalprice waras group leaders Saudi Arabia and Russia clashed over whether the pandemic necessitated fresh production cuts. As lockdowns sent the oil market crashing, the groupreached a truceand agreed the biggest output curbs in history: roughly 10 million barrels a day, or 10% of world supplies. But while the pandemic provoked a fight in OPEC+ last year as demand slumped, it’s now sparking another as consumption returns.\n3. Why is Saudi Arabia’s ally objecting?\nAbu Dhabi believes the agreement that OPEC+ hastily struck in April 2020 has an unsustainable inequity. While production baselines used to measure each country’s required cuts were updated for Saudi Arabia and Russia, the other 21 nations were stuck with levels set in 2018. That’s an acute problem for the UAE, which has invested billions of dollars in new production capacity and is keen to make use of it. The country also needs to pump sufficient volumes to ensure the viability of a recently-launched regional price benchmark,Murban. But there’s also a deeper tension between the two Middle East siblings: Crown Prince Mohammed bin Zayed is determined to carve out an independent political path for Abu Dhabi, stepping out from the shadow of its bigger neighbor.\n4. What does it mean for gasoline prices?\nU.S. oil futures rallied to a six-year high of almost $77 a barrel on July 6 before retreating again, as traders fear the impasse may prevent OPEC+ from filling a looming supply shortfall. With the holiday driving season under way in the northern hemisphere, global oil markets are forecast to tighten sharply in coming months. That could push gasoline prices -- already above the sensitive threshold of $3 a gallon in the U.S. -- even higher. Yet markets have remained volatile amid the OPEC+ spat as traders weigh another option: that the dispute could ultimately fracture the coalition and usher in a new price war.\n5. How could the stalemate be resolved?\nOPEC+ delegates say that consultations are going on behind the scenes to bridge the divide after talksfailed dramaticallyon July 5, but so far they’ve yet to yield results. Ultimately, leaders in Riyadh and Abu Dhabi will need to try and find a compromise. That could be expedited by pressure from key consumers: theadministrationof U.S. President Joe Biden has reached out to the main players and urged them to reconcile. Typically, disputes at OPEC+ are resolved with some creative accounting and a diplomatic fudge that allows the opposing sides to save face.\n6. Is this the beginning of the end for the cartel?\nOPEC’s obituaryhas been written numerous times over the past few decades, only for the organization to rise up again. The OPEC+ alliance it formed with non-members had seemed irretrievably broken when the 2020 price war erupted, yet it too is still standing. While the UAE madeveiled threatslast year about quitting OPEC, analysts widely expect this latest confrontation will be resolved in the coming weeks. But it could foreshadow future conflicts that eventually test the alliance to breaking point. The UAE’s urge to deploy its new production capacity quickly may reflect concern that time is running out for fossil fuels, as the world transitions to low-carbon energy. If the switch to electric vehicles and renewable energy brings global oil demand to a plateau, OPEC+ nations may decide to break from the alliance and pump all they can.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":143046619,"gmtCreate":1625753668031,"gmtModify":1703747914263,"author":{"id":"4087706766405160","authorId":"4087706766405160","name":"rogue66","avatar":"https://static.tigerbbs.com/d05ef0a0c416c4b001aaa84f3a84e3fb","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Up","listText":"Up","text":"Up","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/143046619","repostId":1169470367,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":149773426,"gmtCreate":1625751197465,"gmtModify":1703747780530,"author":{"id":"3568940106394782","authorId":"3568940106394782","name":"Cheryi","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/149773426","repostId":1169470367,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":149754701,"gmtCreate":1625750572703,"gmtModify":1703747759654,"author":{"id":"3581331938298103","authorId":"3581331938298103","name":"SandDust","avatar":"https://static.tigerbbs.com/ea6083d742fc232449a625fb122842c8","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"The longer they keep underground, the less worth those crude become","listText":"The longer they keep underground, the less worth those crude become","text":"The longer they keep underground, the less worth those crude become","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/149754701","repostId":1169470367,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":149789373,"gmtCreate":1625748753092,"gmtModify":1703747704768,"author":{"id":"3581496657430027","authorId":"3581496657430027","name":"TSLAtothemoon","avatar":"https://static.tigerbbs.com/b7eb252b1bc52ab7567a6f6dbc62f92e","vip":1,"hat":"https://static.tigerbbs.com/ae1f49570794979e009a5efdeb6f4789","crmLevel":7,"crmLevelSwitch":1},"htmlText":"Pls give like","listText":"Pls give like","text":"Pls give 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