Abstract: At the juncture of the West's implementation of price caps on Russia's oil exports, OPEC sent a divine assist to Russia, announcing that it would cut production by up to 2 million barrels of oil per day, which effectively supported the declining international oil prices and helped Russia. Russia is very busy. For this matter, many people's interpretation is that Saudi fell to Russia, and the situation of the international game has changed greatly.
According to OPEC+, that is, the Organization of Petroleum Exporting Countries plus 11 other non-OPEC members such as Russia, the Organization of Petroleum Exporting Countries, they have reached an agreement, From November this year, OPEC+ will Oil production is cut by 2 million barrels per day. On the day the decision was announced, Brent futures rose above $94 a barrel, and Nymex light sweet crude futures rose above $88 a barrel. It stands to reason that OPEC's adjustment of oil production is an effective means for these OPEC to intervene in international oil prices. Increasing or reducing production will greatly affect the expectations of market supply, so as to achieve the purpose of affecting international oil prices. Originally this is nothing, it is a routine operation of OPEC, and we often see such news in news reports. However, the context in which the OPEC production cuts occurred this time can be very different from the past. Not long ago, seven Western countries just reached an agreement to limit the price of Russia's oil exports, stipulating that Russia's oil exports cannot exceed $44 per barrel. The purpose of this oil price limit order by Western countries is to suppress international oil prices. On the one hand, it hits Russia’s oil export revenue and weakens Russia’s war ability. Inflation can be described as killing two birds with one stone.
Of course, as soon as the oil price cap in the West came out, many people laughed at it, saying it was a cover-up and deceiving others, because everyone thinks that the world's oil is in short supply, so the oil price is so high, you don't buy Russian oil , Naturally, some people will buy it, and Russia's oil will not be sold to Western countries, and international oil prices will rise even higher. This logic seems to be okay, but in fact it is a big problem. We talked about it in the previous program. If nothing else, if the seven Western countries are really so stupid, then don’t formulate foreign policies. It’s enough to look in our comment area. . In fact, this oil price limit order launched by Western countries will greatly interfere and destroy Russia's oil export industry and disrupt the normal oil market order.
Think about it, Russia's oil exports to Western countries account for more than 60% of its total oil exports. If so much oil is not sold to Western countries, it must flow into other markets, not to mention that other countries have If you have no ability, are you willing to take the risk of sanctions from Western countries to eat these oil, even if you can eat a part of it, why does Russia let others help it? The interest between countries is the highest criterion. What Russia can do is to sell oil at a discount. It has already sold a lot of oil to India at a 30% discount. Now there are severe sanctions such as price caps in the West. Smart Indians can Don't you take the opportunity to take more advantage? That's for sure, it will ask for more discounts, and the news about this has been stabbed by foreign media before. Therefore, the West's oil price limit order cannot be ineffective, and its impact on market expectations is very large.
You might say, the effect is to make gas prices higher. Wrong. Originally, these judgments I said were not very convincing, but this time, Saudi Arabia pushed OPEC countries to cooperate with Russia to reduce oil production by a large margin to support oil prices, which just provided this convincing. Why do OPEC countries want to cooperate with Russia and let everyone reduce production together? The purpose is to tell the market that the supply of oil in the international market will be greatly reduced in the future, so don't worry about the discounted Russian oil. If the international oil price of rises, the discount will be higher than it is now. You have to buy it as soon as possible, and lock the price as soon as possible. This just shows that the oil price limit imposed by the West on Russia has disrupted market expectations and made the market judge that oil prices are about to fall.
This is indeed the case. In the past period of time, international oil prices have been falling. Having said that, I need to add one more point. Many people say that the supply and demand of the international oil market is balanced and will eventually stabilize. You are talking about an idealized market, and the market cannot achieve a real balance of supply and demand for a certain period of time. , what the West wants isThis effect creates new expectations for the future by disrupting the original supply and demand balance. It is expected that oil prices will fall, and the world economy is currently facing the risk of recession, so the consumption demand for oil may already decline in the future.
Well, now Saudi Arabia has pushed OPEC+ to reach this production reduction agreement, which has injected a booster into the oil market, and international oil prices have risen in response. Russia is of course happy. No matter who it sells to, whether it is discounted or not, the international oil price is the benchmark price. If the oil price is higher, it will naturally make more money. This is undoubtedly good news for the currently troubled Russian economy. Speaking of which, I would like to add that although the previously high international energy prices have helped Russia, it is by no means what many people think. According to a report released by the Russian Ministry of Finance, Russia's fiscal revenue from the oil and gas industry fell for four consecutive months in August and was already at its lowest point since June last year. The contribution of oil and gas revenue to Russia's finances is as high as 65%. With the further tightening of Western energy sanctions, Russia's fiscal revenue is not optimistic. Therefore, it is not difficult for us to find out how important ’s decision to cut production by Saudi Arabia and OPEC countries is to Russia in distress, and it is definitely a relief.
So with the support of OPEC+ production cuts, will Russia be able to sit back and relax for some time to come? I'm afraid it's not that simple. First of all, OPEC and other oil-producing countries value their own economic interests the most. Their motivation to support oil prices is not to help Russia, but to worry that a sharp drop in international oil prices will reduce their own income. However, for these oil-exporting countries, the international oil price is not as high as possible. If the international oil price is too high, which hits the recovery of the world economy and plunges the world economy into recession, it will be followed by a sharp increase in oil demand. Reduced, the international oil price plummeted, and ultimately the one who suffered the damage was himself. OPEC must walk a tightrope between cutting production and increasing production, and master the balance. It can only be said that Russia's immediate interests meet with OPEC members.
You must know that they are all oil exporting countries. Now Russia is not equal to other OPEC countries. Russia is being sanctioned by Western countries. In fact, it will be kicked out of the world's largest oil consumption market. Once Russia completely withdraws from the Western oil market, then Will there be other OPEC producers trying to carve up Russia's market share? The answer speaks for itself. Therefore, Russia and OPEC members, including Saudi Arabia, also have serious potential conflicts of interest while cooperating. Second, the oil market is not only a game of the market, but also a political one. As an important ally of the United States in the Middle East, Saudi Arabia cooperated with Russia this time and supported Russia. Is it just to make money? Will it be using Russia as a bargaining chip to exchange more benefits with the United States?
As for the statement that Saudi Arabia wants to ally with Russia and abandon the United States, I suggest you listen to it and have fun. In the Middle East, which is mixed with intricate relations such as national interests, religions, and sectarian conflicts, Saudi Arabia, as a domestic There are sectarian contradictions, and he dreams of becoming a regional leader, and a country that has a long-term and sharply antagonistic relationship with Iran , let him abandon the United States and become an ally of Russia. This is a fantasy. This is a more complicated relationship. It’s fine to do a few more episodes of the show, and it’s inconvenient to talk about a lot of content involving politics and religion in the show. In short, I will conclude that it is impossible for Saudi Arabia to abandon the United States in geopolitics , everything now is Saudi Arabia's bargaining chip with the United States to gain interests, that's all. It is not so much that Saudi Arabia fell to Russia, it is more that Saudi Arabia is playing a poker table game with the United States. Next, you can pay attention to the progress of the negotiation of the -Iran nuclear agreement . There has been a breakthrough recently. I think this is also an important reason for Saudi Arabia and the United States to get angry. The last thing Saudi Arabia wants to see is Iran being eased of sanctions and returning to the international oil market, because Saudi Arabia is very clear that once the United States relaxes sanctions and allows Iran to export oil and natural gas normally, its nemesis Iran will be far more powerful than itself. What about the other way around? Is the US also playing the Iran card with Saudi Arabia? You cut production, okay, I will let Iran, a super heavyweight oil player, enter the market to see if you cut production more or if I increase production more, what judgment will the market give at that time? We might as well ride a donkey to read the songbook and wait and see.
