With oil prices rising to levels last seen during the OPEC Thanksgiving massacre of 2014, developed nations - having realized they made an epic blunder by pushing the Net Zero lunacy far too hard, leaving the oil and gas industry with not nearly enough growth spending to keep the price of oil from surging (as we discussed in "One Bank Crunches The Numbers On Oil Supply/Demand Dynamics, Reaches A Shocking Conclusion")...
... are now stuck begging OPEC+ to produce more, as the alternative is even higher oil prices and attendant social unrest as even ESG posterchild Larry Fink admits.
Speaking to reporters in Rome, a senior US official said that the U.S. is talking to other energy-consuming nations about how to press OPEC+ to boost output to address the current supply crunch. That such pleas aimed at OPEC+ come from the same admin which ended the Keystone XL pipeline on its first day, and has done everything to crush shale capex in the US, is hardly a surprise.
And since even the Biden admin is not dumb enough to grasp that its "demands" will be laughed out of the room, Bloomberg reports that the leaders will also discuss how they might respond if the 23-nation cartel that includes Russia doesn’t take action, the official said, although he wouldn’t speculate on what those options might be.
The statements from the "senior US official" come just in time to confirm recent media reports that a broad campaign has been waged to persuade OPEC+ to speed up its output increases as Bloomberg reported earlier in the week, citing multiple diplomats and industry insiders involved in the contacts.
According to a Bloomberg report last week, an intense campaign was being waged behind closed doors to persuade OPEC+ to speed up its output increases. The cartel, which meets virtually on Nov. 4 to review policy, is currently boosting output at a rate of 400,000 barrels a day each month and will continue doing so for the foreseeable future due to uncertainties associated with covid.
The private efforts come on top of recent public appeals. The Biden administration is increasingly alarmed by rising gasoline prices that have reached a 7-year high, and has been calling on OPEC+ for weeks to pump more oil. Japan, the world’s fourth-largest oil consumer, took the rare step of adding its voice to those calls in late October -- a first for Tokyo since 2008. India, the third-largest consumer, has also asked for more crude. China has been silent in public, but is equally vocal in private, diplomats said.
“We found ourselves in an energy crisis,” Amos Hochstein, the top U.S. energy diplomat, said this week, reflecting a view broadly held view by big oil consuming nations. “Producers should ensure that oil markets and gas markets are balanced.”
On Friday, Saudi Arabia’s King Salman bin Abdulaziz addressed the Group of 20 summit in Rome saying his government seeks “balance” in energy markets. Which, of course, is politically correct wording for the Saudis, and OPEC+, will ignore pleas to hike output especially since shale is hardly rushing to boost production and the price of oil will soon hit $90 if not $100, with the benefits flowing through to the bottom line of ever oil exporter.
"The Kingdom will continue its leading role in economic and health upturn and recovery from the global crises, and in finding a balance to achieve security and stability in energy markets,” he said, according to Saudi press agency.
The OPEC+ cartel meets next on Nov. 4 to conduct a virtual discussion of its policies. However, thanks to Angola we already know the outcome: the African nation rejected consumers’ calls for OPEC+ to increase oil production, saying the group’s plan to gradually add supply is working.
“Many countries and suppliers are calling for more oil and asking the OPEC+ to increase the oil production,” Diamantino Pedro Azevedo, oil minister for the OPEC member, said in a statement. “But in my humble opinion the current plan of increasing production by 400,000 barrels a day agreed in July by OPEC+ is working well and there is no need to deviate from it.”
Translation: not only will OPEC+ not boost production despite the fervent request of virtue-signaling western nations which can't seem to grasp that pushing "green" policies will result in energy hyperinflation (as we explained here), but that the person in charge of the White House has become such a global laughing stock that OPEC+ seems to enjoy rubbing how powerless he is, in his face.