For some time we have been calling for $100 oil and have been saying that the risk was for prices higher than that, not lower.
It seems leaders across the world and even the EIA are finally coming to some realizations. When you constantly restrict the activities of businesses that have a product you desperately need and demand keeps growing, prices have nowhere to go but up. Unfortunately, leaders will not take any responsibility. They will, rather, vilify the energy companies, enact demand and more regulations, and in the end, drive prices even higher.
“Davidson” submits:
Paying attention to changes in market psychology is a good means with which to get handle on price direction. This report of IEA symposium has the tone of panic regarding energy prices. I highlighted 2 bullet points. The comment in bullet point 2 stands out.
Last week, OPEC was under-producing by ~200,000 BBL/Day vs their announced goal, now IEA says it is 1mil BBL/Day. Big jump in 1 week! I see panic building.
OPEC chatter – IEA calls on OPEC, Macron working with Iran, OPEC sees no solutions
- During an IEA energy symposium Wednesday, Chief Birol claimed that “very high oil and gas prices are putting a huge burden on economies … with these prices there is a great risk that the global economic recovery will be much weaker than thought.\”
- Birol went on to say that the OPEC+ alliance has underproduced quotas by nearly 1mb/d, and that “OPEC+ needs to narrow this gap.”
- Elsewhere, Presidents Macron and Xi agreed Wednesday on the need to step up their joint efforts to reach a nuclear deal with Iran, following comments from Iran’s Supreme Security Council earlier in the day indicating the 2015 nuclear deal had become an “empty shell.”
- At an energy conference in Riyadh, OPEC General Secretary Itoua said Wednesday that “there is no immediate solution to high prices” as oil-producing countries’ capacity to increase supply has been curtailed by a lack of investment.
- It seems that there is a strong desire from Western leaders for increased oil supplies; however, with shale industry leaders like Continental and Devon reporting plans for near zero growth in production during 2022 just this week, and majors Exxon , Chevron , Shell and BP guiding to flat year on year production in 2022, it’s not entirely clear where the additional supplies will come from.