The United States heavy bet on rising oil prices may scupper the UAEs plans

Recently, the world oil price changes greatly, after the outbreak in national industrial production, oil demand is reduced, the price of oil is natural to fall in the near future, the global outbreak was gradually control, countries began to rise, demand for oil inventory decline of the producers, the price of oil is only recover, but also in the boom, Crude oil prices have risen $40 in June to $75 today, up 1.61% over the past week.

Oil prices is that many producers want to see, in addition to the Middle East, the United States is the most happy, the United States after the shale oil gas, transformed the original oil importers exporters, itself shale oil production cost is high, the oil is no price advantage, so when the price is low, cannot compete with other country's oil.

The price of oil has gone up, while it's as profitable as oil in other parts of the world, the hope that it can compete with the rest of the world, the global shortage of oil, of course, has made the United States sell more more oil. So now the price of oil is going up, the United States is betting heavily on oil.

However, something is happening today that may make the big bet of the United States go away. Hello everyone, this is Bully of the Great Powers I am a grasshopper. Let's have a look at what is going on in this issue.

After a surge in oil prices, began to layout of the oil in the United States, many oil companies boss have appeal, the oil price will soar to $100 more, in order to further boost the market price, in addition, the United States also began to increase the number of oil drilling, oil service companies in the United States baker hughes, according to data in the year to July 2, the number of oil drilling in the United States, The number of Wells drilled for natural gas has increased to 99, it is clear that the United States is taking advantage of rising oil prices.

The idea of the United States was destined to burst the bubble, although oil price surge is beneficial to the oil industry, but is good for the global industry , therefore, when the international oil price fluctuation is too big, it need to adjust accordingly, at the moment, Opec's time, Opec oil outlet is the full name of organization, the purpose is to coordinate unify the member states oil policy, safeguard the interests of the countries.

Today, a total of Saudi Arabia, Iraq, Iran, Kuwait, united Arab emirates, Qatar, Libya, guinea, Nigeria, Algeria, Angola, Ecuador, venezuela, 14 countries, such as Gabon, crude oil output of all the member countries, the group accounts for one-third of global oil production, the international oil price has a huge influence, The aim of the group is to stabilize oil prices, preferably by raising prices stabilizing the market at the same time. A sharp increase in prices is good for oil producers, so this time the group is trying to regulate oil prices.

The reason for the price spike is that the demand for oil is increasing the production of oil is insufficient. As long as the production of oil is increased, the price of oil will be reduced. Therefore, OPEC has been meeting to discuss the problem of raising the price of oil production. according to the delegates most Opec members, support August 2021 to September 2022, the restoration of oil output to 400000 barrels of oil per month, so can be sustained surge in oil prices, however, may also will continue to rise in price for a period of time, after all, the oil producers also hope that it will remain in a high oil prices, The U.S. may be able to make money on it for a while.

But then the United Arab Emirates reversed course, deciding that the plan was too conservative that it should have increased more. By its reckonings, it could have added an additional 700,000 b/d. Why does the UAE think so? Market is generally believed that by the end of this year, the demand of the global oil market, 2.2 million barrels of daily will be higher than now, so that supply is 5 million BPD, the original production plan is enough to cover all demands, but also for this reason, the betting on demand will continue to accelerate, the supply demand imbalance will lead to a tighter market let oil prices rise again, In addition, the United Arab Emirates, which launched Murban crude futures this year, has a stronger hand wants more pricing power.

The risk that the UAE's move will simply reduce the imbalance in market demand, negating all of America's hopes wiping out any additional American oil production.

At present, the only question is whether the United Arab Emirates will be allowed to increase production by OPEC. According to professional estimates, OPEC may allow the United Arab Emirates to increase production by a small amount, but in general, it is still cautious.

Also worry about the accident, in addition to the united Arab emirates (uae) the United States is also a time bomb, which is Iran, after Iran sanctions in the United States, the oil is sell, so the impact on the international oil price is big, but, as talks between Iran America coming to an end, the United States agreed to gradually relaxing sanctions on Iran, Iran to return to the international oil trade at any time, But, this time is uncertain, Iran has its own plans to increase production of oil, once the country's oil enters the market, is bound to let the market saturation quickly, if Iran's oil to enter the international market, is before Opec decided to increase production, so they still have a chance to adjust, can control oil prices to a certain extent.

However, if after Opec to reach an agreement, the impact on international oil prices is likely to be out of control, after the agreement, countries can increase oil investment, immediately once invest, almost impossible to withdraw, then Iran's oil to join in, the oil market could even overly saturated, while other countries cannot immediately shut down, The price of oil may then fall rather than rise. In fact, oil producers are once again fighting a price war.

Last time, Saudi Arabia Russia's oil price war, it results in the decrease of rapid global oil prices, the oil producers, although the oil price cut is inevitable, but the price of time arrival, early for global oil producers, also is a good news, for in the us especially the huge once into a price war, America's oil no chance, In recent years, the cost of shale oil production has gradually increased, many oil companies are simply insolvent. During the epidemic, hundreds of American oil companies have filed for bankruptcy. The price war broke out, American oil lost competitiveness, which may lead to more bankruptcies of American oil companies.

The oil industry in the United States the future uncertain, another message to bring us a heavy blow, that is RMB assets is sweeping through the global market, the international monetary fund shows that the first quarter of 2021, the total amount of RMB foreign exchange reserves rose to $287.46 billion, accounting for 2.45% of global foreign-exchange reserves, that the international status of RMB rise further, On the contrary, the status of the dollar further decreased, why so said, the foreign exchange reserves of various countries can suddenly increase, the increase in the reserves of one currency, must reduce the reserves of another currency, the selling of dollars by various countries is a proof, which makes the United States petrodollar system encountered a threat. Coupled with the explosion of inflation in the United States, can the growth continue?

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Source: China Energy Network