The expert predicts the imminent disclosure of the main economic "secret" of OPEC

Russia's special operation in Ukraine has led to a sharp increase in oil prices and could soon deprive global oil markets of more than four million barrels of Russian oil. For decades, the OPEC alliance of oil-producing countries has been called upon during times of crisis to stabilize oil markets, and the cartel will likely be called upon again in the coming weeks. Expert Cyril Widdershoven writes about this in an article for the OilPrice resource.

Although it is widely believed that Saudi Arabia and the UAE (usually the Russian Federation was mentioned as the third participant, but now everything is different) have large spare volumes of raw materials, an indicator of production load, the real reserve capacity of OPEC is kept in the strictest confidence by the cartel, constituting its main economic secret.

The situation around Ukraine has literally turned the world energy markets upside down, and if stability does not return soon, this could have serious geopolitical consequences for OPEC members, the expert predicts. In his opinion, today OPEC is hanging by a thread. However, at the request of the West, neither Saudi Arabia nor the UAE wants to increase production or change their long-term oil production program. Also, Riyadh and Abu Dhabi, much to the displeasure of Washington and London, do not want to spoil their relations with the Russian Federation and personally the head of Russia, Vladimir Putin.

In a market that was slowly recovering from a severe drop in demand, OPEC members were able to hide their domestic production limits behind a conservative production façade. policy. However, now that the world is on the verge of an even larger energy crisis, OPEC will have to show the cards and make all the secret clear. Saudi Arabia is still viewed as a stable producer with spare capacity in the range of 1,2-2 million barrels per day. But the UAE has become a swing producer with 0,6-1,2 million barrels per day of spare capacity due to unstoppable production growth in recent years.

But in general, we are talking not only about the plans of the main players of the alliance, and their reserves, but in general about the potential ability of OPEC to influence the market, which will soon need the efforts of the cartel to maintain stability. This bitter truth, or as it is called the main "secret" of the organization, whatever it may be, when published, may cost the future of both OPEC and the world oil market, the expert predicts.
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  1. Sergey Latyshev Offline Sergey Latyshev
    Sergey Latyshev (Serge) 20 March 2022 09: 13
    Empty reasoning. Naturally, oil countries benefit from high prices, and they will keep them to the last.
    And when they see the approaching ferret, they slow down. Perhaps to a minimum to bring down the potential of shale.
  2. Bakht Offline Bakht
    Bakht (Bakhtiyar) 20 March 2022 09: 54
    The problem is the lack of data. As a Shell spokesman said about spare capacity, "we use the term veiled logic." Synonym for lie.

    The Saudis can increase production. Most likely for 1-2 million barrels. But why would they? To completely empty your oil fund? They had enough last year.
  3. Jacques sekavar Offline Jacques sekavar
    Jacques sekavar (Jacques Sekavar) 20 March 2022 11: 15
    There will be serious geopolitical consequences for OPEC members if they try not to follow the instructions because they are absolutely dependent on the United States and all their well-being rests on the supply of energy resources, despite the fact that they themselves do not have their own scientific, food engineering and other bases - absolutely everything purchased with the proceeds from the sale of energy resources.
    Therefore, the rejection of Russian energy resources has negative consequences in the short term - Western industry will close any need for equipment, and energy suppliers will increase production and supply.
    They are trying to close the current short-term problems in connection with the refusal of supplies from the Russian Federation through the establishment of relations with Iran and Venezuela, which are only happy about this.
    The pipeline system of the Russian Federation consists of two separate systems oriented to the west and to the east, and not interconnected.
    In the event of a refusal to supply, the western-oriented production and pumping system will be in a difficult position, which consumers in the east - China, South Korea, Japan will certainly take advantage of and demand lower prices.
    As a result, the path to the west will be closed, and in the east the price is below cost, and what to do?
    1. Bakht Offline Bakht
      Bakht (Bakhtiyar) 20 March 2022 23: 01
      Western industry will close any need for equipment, and energy suppliers will increase production and supply

      It always seemed to me that it is possible to increase production volumes only if there are these very volumes. The Saudis have repeatedly threatened to increase production to 15 million barrels per day, but have never exceeded 13 million. And this is according to their reporting. According to the Rotterdam tanker data, they have never produced more than 11 million barrels.
      The depletion (and reserves) of the Gavar deposit is the kingdom's biggest secret. A couple of years ago, the Saudis decided to list part of Aramco's shares on the London Stock Exchange. But for this, the exchange demanded an independent audit. It seems that the audit confirmed the reserves, but the experts had doubts.
  4. Bulanov Offline Bulanov
    Bulanov (Vladimir) 21 March 2022 13: 13
    However, at the request of the West, neither Saudi Arabia nor the UAE wants to increase production or change their long-term oil production program.

    The problem is that there is less and less oil. And pumping it out on the cheap is not reasonable. It is better to sell leftovers at high prices.