This year, which is nearing its end, has been turbulent for the oil sector, mainly due to the colossus and the accelerated realignment of the global dominant system. So the priority of the energy security of western countries has increased and the hunger for resource control grew increasingly desperate.
We come out of a ‘quiet’ January, which did not envision the rapid spread of covid-19, although the shocking news at the beginning of that month was the assassination of Iranian General Qasem Soleimani by the Donald Trump administration, which set off those alarms in the oil market for fears of an increased risk to Middle East energy supplies, among other implications.
As for crude oil prices, they fell in the following months, when the Covid-19 pandemic was already present until the noisy April 20 arrived, the day the US WTI marker fell from $ 18 / b to -38 $ / b within a few hours.
Graphs showing the behavior of the WTI in April 2020
(Photo: S&P Market Intelligence / Reuters)
In this sense, the Organization of Petroleum Exporting Countries (OPEC) did the same, coordinated and united efforts to determine which policies to adopt to ensure stability of the market given the implications for crude oil demand in this pandemic scenario.
In the light of these specific events, it is also necessary to review the investments in alternative energy, the movements of the major oil companies and some projections from renowned organizations to estimate possible scenarios, taking into account that in January, after the controversial and dire US election, the White House will be chaired by Joe Biden.
The ups and downs of the oil market
Without pretending to cover all interactions affecting the oil market, it wouldn’t hurt to comment on some of the outstanding considerations this year.
Reference has already been made to the event in April, which at this point was justified by mentioning the complications of crude oil storage; However, the next day, the WTI registered $ 11 / b, gradually rebounding above $ 16 / b throughout the week, so it cannot be ruled out that this maneuver was typical speculation typical of the financial structure.
Likewise, concerns were there months before In China, city closures have been established in the context of quarantine since the end of January, causing energy demand to drop sharply.
In addition, Russia and Saudi Arabia, the largest oil producers in OPEC +, decided between February and March not to bow to deeper austerity because their market share could not be jeopardized.
The major corporate media classified these decisions as a “price war” and in particular it is questioned whether this was the case at all, as market shares are crucial to any actor within this dynamic, even this factor is the main topic of any negotiation. Saudi Arabia and Russia simply defended their position in the market against US shale producers, who started the real price war a few years ago, betting on the fall in crude oil prices, as abundant and cheap oil has served. to the West from exciting.
Losing participation and making way for another export country is not very attractive economically. Everyone in the oil game sees his market share as reluctant.
Later, uncertainty in the market worsened due to the evolution of the pandemic, as hopes for a possible vaccine and the increase in covid-19 infections around the world, in addition to the closure of airports and cities, were predicted. that the outlook for the coming months did not seem encouraging for the oil sector.
However, the market remained in some equilibrium amid the pullback it was experiencing in the face of a possible long-term crisis, so from June to October the WTI closed in the $ 30 / b – $ 40 / b band. For the last quarter of the year, prices were expected to collapse one day, but there was optimism about a continued recovery in demand due to the race for vaccine production and rapid adoption.
The International Energy Agency (IEA) and OPEC have projected crude oil demand for the rest of the year. While the IEA’s downward revision is a bit more optimistic, both figures are around 90 million barrels per day and would bring global oil demand back to 2013 levels.
In short, we should not marry optimistic projections, the global economy is entering a new dynamic and based on what has been going on in the energy field this year, it appears that the market is artificially supported by financial interests as many companies are leveraged by bank loans . and if there is a lot of fear of an oil drop, these companies could not be able to pay their debts, which could in fact generate a demand for dollar liquidity that could destabilize the financial system and lead to panic.
For example, the first quarter of 2021 will be partly determined by the next OPEC + meeting, where several countries plan to take their production in tow with the fallout from the multi-edge covid-19 outbreaks.
OPEP + versus NOPEC
For more than a decade, in the context of energy security and independence at the expense of all of the United States, some US Congressmen have promoted legislation to stop the Organization of Petroleum Exporting Countries, but the project has not yet penetrated.
This law is called the “No Oil Production and Export Cartels Act” or more commonly known as “NOPEC,” the project of which was intended to eliminate state immunity, allowing OPEC and its national oil companies to be charged under the United States Antitrust Act (Sherman Act), by that country’s Department of Justice, because the organization affects oil prices. This is completely absurd, but reason does not prevail in these interventionist maneuvers.
For 2018, Donald Trump via Twitter called OPEC a monopoly and rant against the organization for keeping oil prices too high and calling for its lowering, as if OPEC could do that with the push of a button. With these signals, NOPEC’s staunch promoters lobbied Congress and benefited from Trump’s glorification against the organization.
But in April 2020, given the collapse in demand, Trump realized that he needed to join the OPEC + initiative to establish uniform and coordinated guidelines by consensus. This is where the big turnaround took place, the US President reports that he has spoken with Saudi Crown Prince Mohammad bin Salmán and the President of Russia, Vladimir Putin, with the aim of reducing oil production and thus maneuvering the coming scenarios.
Days after the unprecedented consolidation, Trump announced that “the great oil deal with OPEC + has been finalized.” With this fact, OPEC’s role as an intergovernmental organization to engage the oil policies of the member states and this time, accompanied by the G20 countries, was reinforced. And that has been reflected in this difficult year, as the Organization devised the means to ensure price stabilization in the marketplace to avoid harmful fluctuations.
NOPEC, meanwhile, was on hold.
Upcoming scenarios with Biden at the helm
To predict the global oil scenario, it is imperative to include the United States as the major player in the geopolitical energy path, both because of its desperate obsession with controlling the energy resources of others and because of its ideology of technological dominance. It’s no secret that the root or essence of the oil industry in any country as we know it today comes from the United States.
Based on the role the United States plays in this context, Joe Biden recently published his government management companions for years to come. Characters such as Kamala Harris and Anthony Blinken are some of Barack Obama’s students who will now lead this administration. But attention was also focused on who would occupy the Secretary of Energy, and a few days ago he reported that Jennifer Granholm, former Michigan governor and promoter of electric vehicles, will chair that space.
Barack Obama speaks with Michigan Governor Jennifer Granholm at the University of Michigan graduation ceremony in Ann Arbor, Michigan on May 3, 2010 (Photo: White House)
Additionally, Biden appointed Gina McCarthy, former director of the Environmental Protection Agency (EPA), to coordinate climate change issues. McCarthy currently heads the Council for the Defense of Natural Resources, which has sued the Trump administration numerous times.
This is not surprising, because during his campaign Biden was explicit about the Green New Deal policy and internationally the reintegration of the United States in the process of compliance with the Paris Accords is a fact.
Now it looks like the Democratic “heroes” will save the planet, but in the real world, the facts are far from that movie. Remember, the shale boom started around 2008, just as Barack Obama took office for the first of his two tenure as president, making the United States the largest oil and gas producer so far this century.
Biden will not ban fracking, he is not naive, as fracking and shale are in the United States and should be adopted as the state policy of the North American country. What will certainly happen downstream is a realignment of companies in the oil sector, where some will benefit more than others.
In this sense, vigilance must be maintained, as this group that accompanies Biden is an expert in putting together passive-aggressive plans from various international agencies to impose agendas that serve as an excuse to invade or besiege countries, more still, countries that will not allow themselves to be protected. The climate agenda will be one of the crucial maneuvers they could take against Venezuela next year.
A few weeks into the end of this resounding energy year, we must be sure that the era of global oil instability will continue.
(Taken from Mission Truth)