There will be no shortage of oil - OPEC did not order it
Predictions and consequences
So, only on January 18, at least a week after the traditional deadlines, the next OPEC report on the state and prospects of the oil market was published. It follows from it that despite all the negative predictions, despite the decrease in the share of the cartel countries in world production, the strategy of a series of OPEC+ deals has fully justified itself.
This is not the first time that OPEC is trying with all its might to show that it remains, if not a dictator, then certainly a coordinator of the global hydrocarbon market. And a very successful coordinator.
The difficult situation with excessively high gas prices, temporary and, by and large, local, does not even need to be taken out of the brackets, cartel experts are sure. And it's not even that OPEC is not responsible for gas, it's just that, in their opinion, it rather only confirms the conclusions of the cartel's report.
Yes, in the context of a protracted pandemic, stability with oil, albeit very relative, helped the global economy not fall into a depression. Another thing is that hydrocarbons, along with a number of other problems, turned out to be one of the catalysts for widespread inflation.
However, the almost continuous rise in the price of oil itself in 2021, and a very significant one - by more than 50%, so far responds to a rather moderate increase in prices. 10-12 percent in the most sensitive sectors is, you see, not yet a disaster.
That being said, there are very good reasons to believe that the trend will continue, and so far this is exactly what is happening. Over the two decades of January, black gold added another 9 percent in price. And if the recovery in demand continues to exceed supply, the consequences could be unpredictable.
Interestingly, statements of this kind were repeatedly made during the regular January OPEC ministerial meeting in Vienna. So, is it time to ring the bells? Not restrictive measures, not problems with logistics from China, and not even the Russian threat, but the inevitable shortage of oil - is this the main problem of 2022?
Not a deficit, but a surplus?
However, the leaders of the oil cartel stubbornly repeat - "OPEC continues to follow the set course, demand is recovering, although supply is growing". And this is supposedlymeans market transition in 2022 to a state of surplus».
Of course, it is possible to open idle wells and remove restrictions from Iran and the same Venezuela almost instantly, but why, then, is the US preparing to print SPR (Strategic Petroleum Reserve) - strategic reserves? And this despite the fact that oil reserves there are steadily declining.
Why can China start withdrawing oil from its strategic reserves as early as February 2022? And it is no longer so important that both are not yet reflected in oil prices. Globally or only strategically - how OPEC functionaries like to juggle with these definitions.
So, in the regular report of the oil cartel published on January 18, the figures, which, as always, are more than necessary, only camouflage alarm. How it is camouflaged by the self-satisfaction of oil kings, barons and sheikhs, which is seen literally in every conclusion - it is difficult to call it otherwise.
Demand for oil in 2021 has grown significantly - no one expected anything else. An increase of 5,65 million daily barrels to a total of 96,63 million barrels is 6,22 percent. The world economy has not grown so much, which means that oil has once again squeezed out other energy sources. As it was before covid-19.
It seems that the oilmen should rub their hands, but they seem to carefully hide it, clearly hoping that the process will not stop, not even slow down. You say - green energy, gas, atom? Not today, yet, gentlemen, there is simply nowhere to go without oil.
The OPEC forecast for 2022 suggests that consumption will grow by another 4,15 percent and exceed the landmark mark of 100 million barrels per day. According to the World Bank experts, the economy may outpace the growth in oil consumption. Is the transition really starting?
Oil is out of competition
If we are to believe OPEC's calculations, the energy transition, if it does begin, will only start in the fourth quarter of this year, since it accounts for the entire increase in oil consumption. Or maybe just the winter of 2022-2023. will it be cold again?
OPEC recognizes that hopes for growth should be associated with the abolition of anti-COVID restrictions, an increase in demand for petrochemical products, decoupling logistics hubs, and at least a partial restoration of air travel. Competitive energy sources are here, as you understand - oil is not a competitor.
And yet - if OPEC's optimism, albeit ostentatious, is justified by something, then this is data on oil reserves and levels of oil production. Inventories have declined almost everywhere, and to a greater extent where the growth of economies is just outpacing.
The loss of almost 30 million barrels per month (this is data for November 2021) with a total amount of over 2,71 billion seems to be a trifle, but if it goes, what is called “trend”, you can run into a crisis. Plus or minus 10-12 percent per year is already serious.
If, however, the United States, together with China, greatly deplete their reserves, this will become an additional incentive to jump in prices.
With prey even more interesting. After so many years of struggle to limit it, it is quite possible to wait for the go-ahead to restore capacity. At the last meetings, no one gave it, but conversations go on all the time. And a statement of an increase in supplies daily by 3,02 million barrels per day from non-OPEC countries is in place.
Those who produce shale oil in the United States, who formally joined the OPEC + deal, did not expect any go-ahead. And they are increasing production with all their might, because in the current market conditions they practically do not risk anything. And as a result, they have already exceeded the mark of 8 percent in terms of their share in global production.
Since such volumes are no less difficult to regulate than, for example, Russian production, OPEC faces considerable problems. But you really want to give that very “go-ahead”. But in the short term it is unlikely to succeed.
- Victor Malyshev, Dmitry Malyshev
- minenergo.gov.ru, aa.com.tr, neftegaz.ru, ngs-penza.ru
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