SINGAPORE (NYTIMES, BLOOMBERG) – Oil advanced in early Asian trading on Friday (Nov 5) after the Organisation of the Petroleum Exporting Countries (Opec), Russia and other oil-producing nations shook off pressure from the Biden administration and decided to stick with their previous plan to raise oil production by a modest 400,000 barrels a day next month.
West Texas Intermediate crude rose 1.6 per cent to US$80.05 a barrel after sliding 2.5 per cent on Thursday.
United States President Joe Biden and other world leaders have called on countries like Saudi Arabia and the United Arab Emirates to increase production because oil prices, which collapsed during last year’s pandemic lockdowns, have now reached their highest levels in seven years. Gasoline prices, too, have jumped in the US, Britain and elsewhere.
The jump in prices, Mr Biden said on Tuesday, “is a consequence of, thus far, the refusal of Russia or the Opec nations to pump more oil”.
But on Thursday, there was no change of heart at the monthly meeting of the Opec+ alliance, the group of 23 oil-producing nations led by Saudi Arabia and Russia.
The group said it was committed to ensuring “a stable and balanced oil market”, and officials stressed that they have been responsible stewards of the oil market, carefully matching output to rising demand.
And they pointed the finger at other energy markets – including natural gas and electricity, both of which have seen prices rocket in recent weeks – accusing them of “extreme volatility and instability”.
Prince Abdulaziz bin Salman, the Saudi oil minister who led the meeting, displayed a chart showing that since the beginning of March the prices of natural gas in Europe have roughly quintupled while Brent crude oil, the international benchmark, is only up by around one-third.
“Oil is not the problem,” he said.
IHS Markit executive director Bhushan Bahree noted that although Saudi Arabia had returned its oil production to pre-pandemic levels, the output of the US, the world’s largest oil producer, is still well below what it was before the virus hit.
Mr Biden has raised the possibility of tapping the US strategic petroleum reserve to modestly increase oil supplies as a means to control prices. Analysts, though, say that such a move would provide only temporary relief.