Business Insider reported that international oil markets could be heading towards a new war, as leading OPEC and non-OPEC producers are “vying for increased stakes”.
There has been an unexpected cooperation between countries with the full support of both Russia and Saudi Arabia for the crude markets, which has happened from the year-and-a-half of stabilisation concomitant with it. The predicted oil crisis, crude oil crisis, was averted by this unexpected cooperation.
“As long as Saudi Arabia, Russia and some other major producers (UAE, Kuwait), are supporting a production cut extension, financials will be seeing some light at the end of the tunnel.”
The second shale oil revolution has been “mostly mitigated by a reasonably high compliance of OPEC and non-OPEC members” based on agreements to cuts by the members. The stabilisation associated with the market deals with economics, geopolitics, and the national interests of the OPEC and non-OPEC member states.
“…geopolitical and security issues have prevented Libya, Iraq, Venezuela and Nigeria, from entering with new volumes. Stabilisation in the crude oil market, as always, is not only fundamentals but also geopolitics and national interests.”
There are some growing fears that Saudi Arabia, an OPEC leading producer, might not be happy in the near-future based on the overall effects of the production cuts. However, there are other smaller OPEC members including Iraq and Iran that have predicted an increase in production.
Nonetheless, the main rivals are Saudi Arabia and Russia, who are the big ones of the OPEC and non-OPEC countries. Russia is the biggest non-OPEC country. Saudi Arabia is the biggest OPEC country. With regards to the European oil markets, Russia remains the largest supplier with about 3/10 of the total supply in 2016.
“Even if Moscow is still fully behind the official production cuts, Russian oil companies have been aggressively fighting for additional market share in Saudi Arabia’s main client markets,” Business Insider said, “China, India and even Japan. Iraq and Iran, in contrast to what was expected, have been cutting away share in Europe.”
With regards to the non-European oil markets, Saudi Arabia is the big generator and supplier. This is all to do with the Russian-Saudi oil war, who both “need…stabilisation in the market.” There apparently is a “conflict…brewing, but has not yet come to the surface.”
Europe’s industry is both a stable and a growing crude oil market. The price war could play out in the European oil or crude oil market sphere. Saudi Arabia and Russia are not necessarily willing to risk that price war.
Business Insider said, “Threatened by its own successful agreement, Saudi Arabia is now feeling the heat on all sides. Some analysts are even [proposing]a doomsday scenario, implying that Riyadh has lost its grip on the largest oil markets.”
In addition, Putin is at risk in the next 12 months of maintaining power with elections upcoming in addition to the heavy dependency on the oil market. “Iraq and Iran have been very smart by attempting to sneakily take market share from both sides.” Business Insider called this the “Iran-Iraq axis.”
Saudi Aramco’s first moves to re-enter Europe, however, clearly show that they are not willing to keep picking up the bill for others…Money will talk as additional outlets (refinery projects) were acquired by Aramco last month…Riyadh’s decision to change its European price setting is, however, a clear signal that there is a red line for the Oil Kingdom.”
Scott Douglas Jacobsen is the Founder of In-Sight: Independent Interview-Based Journal and In-Sight Publishing. Jacobsen works for science and human rights, especially women’s and children’s rights. He considers the modern scientific and technological world the foundation for the provision of the basics of human life throughout the world and advancement of human rights as the universal movement among peoples everywhere.