If you have been following the recent controversy with OPEC (The Organization of the Petroleum Exporting Countries), read on as there is more news. In my previous blog, I wrote about OPEC’s decision to cut the production of oil just before the mid-term election, which severely embarrassed President Biden who had highlighted the decision by Saudi Arabia to increase production over the summer.
In the past week, Saudi Arabia announced that it planned to increase the production of oil. At the upcoming OPEC summit, scheduled on December 4th, Saudi Arabia aims to discuss an increase of 500 thousand barrels daily. Saudi also stated that their last production cut was not to endorse the war, but they wanted to keep prices at a level they thought would be good for their economy. Saudi Arabia is likely to implement these actions in order to maintain a good relationship with the US and to help with worldwide inflation which could cause long-term economic damage to the world.
In addition, the EU and in particular the G7 are also planning an embargo as well as a price cap on Russian oil, in order to give Russia an extremely difficult time. Russia has said that it will not supply oil to those participating in either event, however, Saudi Arabia stated that they will provide those countries in need with oil.
It will be interesting to see how this geo-political game with economic consequences plays out over the next 6 months with the winter season descending upon Europe and the Ukrainian war still not resolved.
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