Oil prices have been rising in recent days, both following the lifting of the Chinese corona closure and the Russian-Ukrainian fighting. Discussions in recent days at OPEC + revolve around the fact that other countries in the organization could fill the gap created by the sector due to the lack of Russian oil purchases, but many analysts believe that these measures will not be enough to finally curb oil prices.
“Bringing oil from Saudi Arabia instead of Russia will release pressure from the sector, and we believe this will help curb prices in the short term, but it is difficult to say whether this will allow a return to pre-Corona flexibility as we had before the plague,” said Eduardo Campanella, economist at Italian bank UniCredit.
As mentioned, the OPEC itself is made up of 13 countries that export oil. On the other hand, the OPEC + is made up of 10 other countries – which also include Russia itself. Some of the organization’s countries – which are expected to hold its regular meeting tomorrow – claim at this stage that they are interested in not including Russia in the upcoming oil export destinations.
Last year, Ofek + confirmed that it would increase its monthly oil production in order to deal with the damage caused by the corona plague. Some of Ofek +’s claims now are as follows – because Russia has invaded Ukraine, many countries are not interested in purchasing oil from it. Now, the EU decision to impose further sanctions on Russia in this regard raises many questions about its ability to sell the resource out.
Since Russia invaded Ukraine in February, its oil exports have fallen by 8%. It is not yet known whether OPEC + will indeed decide to “exempt” Russia from the export agreements, and it is not yet known how Moscow will react if such a decision is indeed made by the organization.
“Moscow’s death from export targets would prove unlikely to increase its oil exports to prevent a more severe economic crisis when the United States, Britain and now the EU do not purchase the oil from it,” said Ruby Fraser, director of the research department. In the French energy body Schneider Electric.
Fraser points out how despite the fact that Russian oil exports have met its targets recently, these exports are expected to plummet in the coming weeks and months.
In any case, OPEC + itself is now in trouble. The organization has set itself a monthly target of 430,000 additional barrels of oil, which it exports, although it has had difficulty meeting this target in recent months. Many experts in the field now claim that this difficulty is due From the lack of investment in the search for oil sources in recent years.
Saudi Arabia’s energy minister, Prince Abdullahiz bin Salman, said as early as last May that “global energy sources are on the way to extinction.” Meanwhile, it seems that global energy sources – the least liquid – are indeed on their way to an end. According to Campanella, the global oil market is now in a very limited situation, and OPEC +’s inability to assist in the situation does not help the situation.
The economist further adds that in his estimation, the lack of Russian ability to support the organization’s oil exports will make it helpless in the foreseeable future. The organization has now set itself a goal – to extract 4.5 million barrels of oil every day by July, which means a goal similar to what the organization will come out of last year.
In practice, the organization is expected to export less oil than it did last year, due to the fact that many countries in the organization such as Saudi Arabia, the United Arab Emirates and Iraq simply did not have enough left over from which they could distill more oil. Also, these countries will not be able to accelerate refining in the coming months, thus having to be left with nothing.
Meanwhile, even if OPEC + makes a decision to exclude Russia from its target ranges – a decision that will probably lead to an increase in oil prices – it will be a short-term decision. According to the economist, the only way OPEC + can exempt Moscow Its export targets are the return of Iran to the organization, a controversial decision since the country has many sanctions as part of its nuclear deal with it.