An OPEC representative said that although Iran is not a member of the OPEC+ Joint Ministerial Monitoring Committee (JMMC), it will still attend the committee on March 3 s meeting. OPEC and its allies will meet the next day to consider April output levels. It is not uncommon for non-JMMC members to attend meetings, and OPEC members such as Libya and Venezuela have participated in meetings before. But Iran’s attendance was somewhat unusual and the country is engaged in a diplomatic maneuver that could eventually lift sanctions on its crude exports. If large amounts of crude oil from the country enter global markets, it will complicate OPEC’s efforts to eliminate market gluts.
During the Spring Festival holiday, international oil prices continued to rise, with Brent oil prices once approaching the $65/barrel mark. Under such circumstances, some market participants concluded that oil prices have entered a new “super cycle”, which triggered heated discussions in the industry.
Jeff Currie, head of commodity research at Goldman Sachs, has already shouted that copper and crude oil are already in a commodity “super cycle” and “the story has just begun.”
“Be long in crude oil and hold on to it. Crude oil still has a lot of room to rise. I don’t know if oil prices will return to $150/barrel. We are talking about a Repricing at the macro level, everything is repricing,” Currie said in an interview.
Differences between OPEC+ may intensify
Higher oil prices may intensify tensions among OPEC+ members, inducing already disobedient members to become even more disobedient.
Differences have already emerged within OPEC+. In the last OPEC+ meeting to discuss production quotas, taking into account the interests of Russia and other countries, these member countries had to make compromises and significantly reduce production. Now, Saudi Arabia has said it will suspend its previous voluntary unilateral production cut of 1 million barrels per day and will do everything it can to increase oil prices.
Lrina Slav believes that this shows that OPEC, especially Saudi Arabia, has become optimistic about oil prices. However, according to media reports, the OPEC+ decision may change if oil prices turn lower. Once the impact of the severe cold in Texas fully subsides, news that Saudi Arabia is adding 1 million barrels per day of oil supply is likely to have a negative impact on oil prices.
In addition, although Saudi Arabia said it would do its best to increase oil prices, Russia believed that the oil market had been rebalanced. Russian Deputy Prime Minister Alexander Novak said in a TV interview last week: “The oil market has not been very volatile in the past few months. This shows that the market is balanced and today’s price levels are consistent with the future trend of the market. .”
Novak added that while oil demand last spring was 20%-25% below normal levels for the same period in previous years, the reduction had narrowed to 8% by the end of 2020. % – 9%.
Lrina Slav said that Russia is one of the countries in OPEC+ that reluctantly obeys the agreement. In fact, Russia, like Iraq, has been overproducing.
According to Iraq’s report, it said it was further reducing crude oil production to make up for last year’s overproduction. But in fact, the country’s oil exports increased in the first two weeks of February. According to reports, Iraq may have exceeded its own cap of 3.6 million barrels per day for a full month, and even exceeded the 3.85 million barrels per day limit set by OPEC.
There is also Iran, which is already increasing production because it is not subject to OPEC+ production cuts and plans to return to the international oil stage after the United States lifts sanctions. However, Iran has not taken the next step after the United States lifted sanctions on Iran for suspending uranium enrichment activities.
Earlier this month, the United States said it had rescinded a declaration made by Trump when he took office that all United Nations sanctions on Iran had been lifted, which could be seen as a A gesture of goodwill. But Lrina Slav said the statement was invalid because it used provisions from the 2015 nuclear deal with Iran, from which the United States had withdrawn before the statement was issued. Regardless, Iran has reason to be optimistic that it will soon be freed from sanctions and ready to produce more crude.
Lrina Slav said the divisions within OPEC+ between production cut hawks and production increase doves will only intensify with the latest good oil news, which has already caused Saudi Oil Minister Saleh A warning came from Crown Prince Abdulaziz bin Salman, who said earlier this week: “I must warn everyone again not to be overly optimistic about the good news. Uncertainty remains very high and we must be very cautious. The legacy of last year’s events Scars tell us we should be more cautious.”
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