OPEC loses its influence on the world energy market
Sun, 29 Jul 2018 11:16:00 +0000
According to many international experts, the OPEC, which was once in charge of the global energy market, seems to be losing control over it. The cartel still has to fight for its place under the sun in the midst of a new reality of price regulation.
Control over oil prices is now leading to a new decision center. International experts believe that the new center will host the United States, Russia and Saudi Arabia. For those of you who do not know it, today 's oil prices are determined primarily by the OPEC + agreement signed by the cartel as well as by others. non-OPEC oil-producing countries led by Russia. The administration of Donald Trump now claims his own seat at the decision table.
To make OPEC participants more cooperative, Washington could well extend its anti-cartel legislation to OPEC. According to Bloomberg, the cartel is already working on some countermeasures to respond if US lawmakers finally approve the anti-cartel bill. It is interesting to note that OPEC consults US lawyers on this subject. Over the next few days, they plan to meet White & Case LLP.
OPEC participants want to receive recommendations on next steps to follow if the NOPEC bill is approved and becomes law. For those of you who do not know it, NOPEC is the abbreviation for No Oil Productions and Exporting Cartels Act. The bill was introduced in May 2018. A few weeks ago, the Senate amended Sherman's anti-monopoly law of 1890. For those of you who do not know, this law destroyed the John Rockefeller's Standard Oil Corporation more than 100 years ago. Supposedly, after pbading the NOPEC bill, Washington will have the opportunity to sue OPEC for manipulating oil prices.
Earlier, Donald Trump had criticized the cartel. He blamed OPEC for artificially raising oil prices and urged the cartel to increase oil production. At this point, OPEC + participants have already begun to increase their daily oil production under the amended OPEC + agreement. As you probably know, at the end of 2016, OPEC participants agreed to reduce their total crude oil production by 1.8 million barrels per day compared to October 2016 figures. Later, a collapse of oil production in Venezuela led to exceed the goal. This is the reason why they decided to increase their total production by 1 million barrels a day. the decision was made at the recent OPEC + summit in June 2018. It now seems that the goal of higher production is also exceeded.
Making a Trinity Union on the World Energy Market
On the other day, cartel representatives reported that the implementation of the agreements had dropped to 121% in June . Some international observers call this the conclusion of a new alliance between the United States, Russia and Saudi Arabia. This alliance is expected to coordinate the global crude oil market.
According to observers, this kind of alliance has existed for decades. It began as an alliance between the United States and Saudi Arabia to resist the USSR. Thus, Russia can join the alliance as a major player in the oil market while all other OPEC participants are no longer taken into account because they have a lot of economic problems and their decisions are easy to anticipate.
At the same time, other observers do not believe that a Trinitarian union will emerge at any given time. They say that the US can not participate in agreements like OPEC + because to do this, the US government must be able to regulate its own oil production quotas
The US Domestic Crude Oil Market has many oil companies, making it almost impossible to coordinate any changes in their production. The government can only regulate the export of crude oil. However, the United States can influence oil prices by regulating the movement of US dollars.
Thus, the role of the United States in the world market is to support acceptable oil prices. Still, if the United States stops importing crude oil and begins to consume its own oil, the government's policy could change. In this case, American politicians will be more comfortable with the Middle East and turn some of their allies into enemies. Given that the United States wants to curb China's growth, US politicians are not afraid to disrupt oil exports from the Middle Easter to China.
You are free to discuss this article here:
forum for traders and investors
