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Maybe expect $ 200 a barrel :: Dienas Bizness

After the oil price shock that followed Russia’s invasion of Ukraine, the value of black gold slipped lower. However, since the first part of May, the price of oil in the world has been rising stubbornly again, where it has once again risen above the round mark of 120 US dollars per barrel.

The ongoing oil price front and the fact that many may no longer expect any significant depletion of this resource and its products seem to be well illustrated by the price lists at petrol stations, where the price of petrol has clearly exceeded two euros per liter. Tupat is also diesel.

The recent rise in oil prices partly reflects the new European sanctions package against Russia. As part of this year, it is planned to give up the country’s oil, which flows by sea. This decision creates additional oil supply holes, followed by additional price increases. So far, global oil demand has also remained strong. Moreover, the faster disappearance of Russian oil from the market (which will mean that the country will hardly be able to reorient its supply to other regions very quickly) cannot be compensated for, as insufficient investment in new oil has been made for years.

Even without the whole of Russia’s war, the presumption has begun to disappear that a new so-called supercycle of raw materials has begun, called for years or even decades of very strong demand for such resources, which their producers and producers cannot really cope with.

OPEC cosmetic repair

With the advent of summer, some attempts were made by the Organization of the Exporting Countries for Crude Oil (OPEC) to counteract such oil prices. In fact, this cartel (at least for most of its members) should not be based on the fact that events in the black gold market are leading to a general price chaos that is escalating into another economic, political and communicative chaos for the world economy. OPEC is also operating better in more or less clear conditions. There has also been a lot of pressure on OPEC leaders, for example, from the United States.

They (and other leading Western regimes) are facing increasing headaches from soaring fuel and inflation in general. After all, the US is scheduled to hold congressional elections in November this year, and the general assumption is that the price of fuel for US voters is a very important determinant. However, the recent decision by OPEC and its cartel allies to increase oil production by an average of 648 thousand barrels per day in July and August. Prior to that, OPEC was expected to increase its oil production at a slower pace during this period, by 432 thousand barrels per day. As a result, this announced adjusted increase was about half that previously planned.

Read the full article in the June 14 magazine Dienas Bizness!

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