Saturday, January 28, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use
Oil Market News
  • Home
  • Marketdaily
  • Price
  • crudenow
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEChot
  • brend
  • ships
Oil Market News
Home Price

Biden is risking an oil-price war

8 months ago
in Price
Biden is risking an oil-price war
Share on FacebookShare on Twitter


President Biden’s move to release oil from a national stockpile may provide some short-term relief to drivers paying an average of $3.50 per gallon to fuel up. Gasoline prices have risen 50% during the last year, crimping the recovery from the pandemic downturn—and infuriating drivers. Dropping more oil into the market will put downward pressure on gas prices.

But there are risks the move could backfire. Over the summer, Biden asked oil-exporting nations in the Middle East and elsewhere to pump more oil. They declined. The nations belonging to the oil cartel OPEC+ generally favor oil prices at $70 per barrel or higher, a level that optimizes revenue for them. More production would lower prices, which are currently around $80. Major oil producers such as Russia and Iran have no interest in doing Biden a favor, and even allies such as Saudi Arabia and Iraq want to maximize oil profits after a lean stretch in which prices fell to as low as $20 per barrel.

The OPEC+ nations have been planning an incremental supply increase of 400,000 barrels per day, but that would boost global supplies by less than one-half of 1%—far less than Biden wanted. Biden plans to release 50 million barrels from the U.S. reserve during the next several months. The Biden administration is also coordinating with the UK, China, India, Japan and Korea, which will release millions of additional barrels from their own reserves. None of those nations belong to OPEC+.

The prices for grades of gasoline are shown on a sign outside a Conoco station Friday, Nov. 5, 2021, in Denver. (AP Photo/David Zalubowski)

The prices for grades of gasoline are shown on a sign outside a Conoco station Friday, Nov. 5, 2021, in Denver. (AP Photo/David Zalubowski)

The arrangement is a confrontation of sorts between oil-consuming nations, and oil producers. If OPEC+ continues to pump at expected levels, then the additional supply would lower oil prices, as Biden hopes. But OPEC+ could also cut its own supply, to keep prices up, or push them even higher. “This raises the specter of a disruptive standoff that pits major producers led by OPEC+ against big consumers, led by the U.S.,” the Eurasia Group explained in a Nov. 22 analysis. “Countervailing moves by each side are likely to lead to increased volatility, producing seesawing oil prices and added uncertainty.”

[Click here to get Rick Newman’s stories by email.]

Biden obviously cares about domestic politics. An unforeseen bout of inflation—led by rising energy costs—has damaged Biden’s reputation and torpedoed his approval ratings. Big oil-producing countries, however, care about price stability, and they’re worried about longer-term trends that could dent demand for oil, and prices. Ongoing Covid outbreaks around the world could kneecap the global recovery and the rebound in commodity prices. Stimulus programs in the United States and other countries are winding down, another possible drag on demand. And many nations are pushing green-energy policies that portend the long-term decline of fossil fuels.

OPEC (Organization of the Petroleum Exporting Countries) organization logo and a miniature model of an oil derrick pump are pictured in this illustration photo taken in Kyiv on 14 August, 2021. (Photo by STR/NurPhoto via Getty Images)

OPEC (Organization of the Petroleum Exporting Countries) organization logo. (Photo by STR/NurPhoto via Getty Images)

OPEC+ nations are meeting in early December, a gathering where they were expected to ratify the plan to gradually boost supply by 400,000 barrels per day. But that event could now produce a different result, as the cartel deliberates how to respond to Biden’s move. No change in plans would be a dovish response, indicating accepting of slightly lower prices, for a while, at least. But the cartel could surprise markets with, say, a cut in output, which would undermine Biden’s move by pushing prices up.

There are other oddities to Biden’s decision to release oil from the US stockpile. The world’s biggest oil producer isn’t Russia or Saudi Arabia, but the United States. Yet Biden hasn’t “asked” American drillers to produce more, likely because it would look like a blatant conflict with his aggressive green-energy plan. The United States, as a free-enterprise democracy, also doesn’t exert government control over the energy sector. Congress could pass additional tax breaks or other incentives for fossil-fuel production, but it’s currently considering the opposite as part of the Biden Build Back Better legislation.

FILE - President Joe Biden speaks as he announces that he is nominating Jerome Powell for a second four-year term as Federal Reserve chair, during an event in the South Court Auditorium on the White House complex in Washington, Monday, Nov. 22, 2021. The White House on Tuesday said it had ordered 50 million barrels of oil released from strategic reserve to bring down energy costs.  (AP Photo/Susan Walsh, File)

The White House on Tuesday said it had ordered 50 million barrels of oil released from strategic reserve to bring down energy costs. (AP Photo/Susan Walsh, File)

Oil prices remain difficult for any politician to control. In 2011, President Obama released 30 million barrels of oil from the U.S. reserve to counteract supply shortages related to disruptions in Libya. Prices dipped briefly, but were higher than before six months later. OPEC, for its part, has a history of fractious relations among member nations and lack of discipline sustaining production quotas, as some nations desperate for cash often produce more than assigned.

The proverbial cure for higher oil prices is higher oil prices—because the appeal of larger profits is an incentive to produce more, which in turn boosts supply and brings prices down. But a new wrinkle is the global push for green energy, which is crimping the investment needed to develop new rigs or reopen shuttered wells. That puts Biden in the awkward position of demanding more oil now even as he crusades for its eventual obsolescence. Whatever keeps American drivers happy.

Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips.

Read more:

Get the latest financial and business news from Yahoo Finance





news.google.com

Latest Oil News

Indexes Rally and Notch Weekly Gains

Indexes Rally and Notch Weekly Gains

January 27, 2023
Oil revenue in Kuwait seen to exceed $81.25bln in fiscal ’22-’23

Oil revenue in Kuwait seen to exceed $81.25bln in fiscal ’22-’23

January 26, 2023
Why are we settling for inflation?

Why are we settling for inflation?

January 25, 2023
Davos 2023: Big oil comes in from the cold on energy transition

Oil falls $2/barrel on economic jitters, U.S. crude stock build

January 24, 2023
Tags: BidenoilpriceriskingWar
Previous Post

Oil Price Rise Blamed in Part on OPEC, Russian Output Shortfalls

Next Post

FTSE 100 falls as Rolls-Royce confirms 9000 job cuts

Related Posts

Indexes Rally and Notch Weekly Gains

Indexes Rally and Notch Weekly Gains

by Oil Market News
January 27, 2023
0

US stocks closed higher Friday after reversing early-session losses.  Easing inflation data added to investor optimism that the Federal Reserve...

Oil revenue in Kuwait seen to exceed $81.25bln in fiscal ’22-’23

Oil revenue in Kuwait seen to exceed $81.25bln in fiscal ’22-’23

by Oil Market News
January 26, 2023
0

With the stability in oil prices at acceptable levels, financial sources expect the oil revenues in the budget for the...

Why are we settling for inflation?

Why are we settling for inflation?

by Oil Market News
January 25, 2023
0

The recent UN climate summit COP27 has accelerated a global push for green energy without regard to unintended consequences.  Although...

Davos 2023: Big oil comes in from the cold on energy transition

Oil falls $2/barrel on economic jitters, U.S. crude stock build

by Oil Market News
January 24, 2023
0

U.S. business activity contracts in JanU.S. crude stocks likely to rise - pollOPEC+ panel unlikely to tweak oil policy at...

Stock Market Erases Some Gains; Weak Economic Data Fuels Rate Hopes; Tech-Heavy

Stock Market Erases Some Gains; Weak Economic Data Fuels Rate Hopes; Tech-Heavy

by Oil Market News
January 23, 2023
0

The stock market closed higher Monday, led by the tech-heavy Nasdaq. A weaker-than-expected reading of the leading economic indicators fueled...

Domestic gasoline price rises 8.64% in the last month

Domestic gasoline price rises 8.64% in the last month

by Oil Market News
January 22, 2023
0

The retail price of regular gasoline or gasoline 92 (EA92) in the domestic market shot up by 8.64 percent to...

Next Post
FTSE 100 falls as Rolls-Royce confirms 9000 job cuts

FTSE 100 falls as Rolls-Royce confirms 9000 job cuts

Subscribe
Notify of
guest
guest
0 Comments
Inline Feedbacks
View all comments

Trend Oil News

More Gains For Crude, But Some Warn That Economic Recovery Could Be Impeded

More Gains For Crude, But Some Warn That Economic Recovery Could Be Impeded

8 months ago
Iran claims oil, petrochem exports hit highest since 2018

Iran claims oil, petrochem exports hit highest since 2018

2 months ago
Higher crude oil price secures govt’s fiscal position

Higher crude oil price secures govt’s fiscal position

9 months ago
EnQuest Plc output at top end of previously downgraded guidance

EnQuest Plc output at top end of previously downgraded guidance

9 months ago
Texas lawmakers could consider a tax on flared, vented natural gas

Texas lawmakers could consider a tax on flared, vented natural gas

9 months ago
ADVERTISEMENT
Bob Simpson’s TXO Energy goes public, soars 10% on first trading day

Bob Simpson’s TXO Energy goes public, soars 10% on first trading day

January 27, 2023

Internet of Things-as-a-Service to Enable Improved Opportunities

January 27, 2023

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

January 27, 2023

White House blasts Big Oil stock buybacks again as Chevron profits double

January 27, 2023

OPEC to Stay the Course on Oil Production Agreement; China’s Reopening Bullish for

January 27, 2023

Trinity To Spud Jacobin Well In Second Quarter Of 2023

January 27, 2023

Crude Oil

German Crude Oil Imports Rose 11% in 2022 As Crude Import Bill Doubles

German Crude Oil Imports Rose 11% in 2022 As Crude Import Bill Doubles

January 27, 2023
Europe Is Diversifying Its Diesel Sources Ahead Of Ban On Russian Fuel

Europe Is Diversifying Its Diesel Sources Ahead Of Ban On Russian Fuel

January 26, 2023
Opinion | Should the Strategic Petroleum Reserve Be Used Now?

Opinion | Should the Strategic Petroleum Reserve Be Used Now?

January 25, 2023
Rising Crude, Oil Products Inventories Weigh On Oil Prices

Rising Crude, Oil Products Inventories Weigh On Oil Prices

January 24, 2023

Investing

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

January 27, 2023
ESG Investing Fight Is Heating up in Kentucky and Could Cost Taxpayers

ESG Investing Fight Is Heating up in Kentucky and Could Cost Taxpayers

January 26, 2023
Chevron goes big with new $75 billion buyback, surpassing Exxon’s By Investing.com

Chevron goes big with new $75 billion buyback, surpassing Exxon’s By Investing.com

January 25, 2023
Oil falls $2/barrel on economic jitters, U.S. crude stock build By Reuters

Oil falls $2/barrel on economic jitters, U.S. crude stock build By Reuters

January 24, 2023

Market

Chevron profits slip as oil and gas prices fall

Chevron profits slip as oil and gas prices fall

January 27, 2023
Big Oil’s cash bonanza | Financial Times

Big Oil’s cash bonanza | Financial Times

January 26, 2023
NYC pension schemes test support for climate action at bank meetings

NYC pension schemes test support for climate action at bank meetings

January 25, 2023
Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

January 24, 2023

OPEC

OPEC to Stay the Course on Oil Production Agreement; China’s Reopening Bullish for

OPEC to Stay the Course on Oil Production Agreement; China’s Reopening Bullish for

January 27, 2023
Biden vowed to punish Saudis over OPEC cut. That’s no longer the plan

Biden vowed to punish Saudis over OPEC cut. That’s no longer the plan

January 26, 2023
Oil Steadies as Traders Look to China, OPEC for Fresh Triggers

Oil Steadies as Traders Look to China, OPEC for Fresh Triggers

January 25, 2023
FG tasks 2023 OPEC’s President on attracting investments in oil

FG tasks 2023 OPEC’s President on attracting investments in oil

January 24, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use

© 2022 OilMarket.News

No Result
View All Result
  • Home
  • Market
  • Price
  • crude
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEC
  • brend
  • ships

© 2022 OilMarket.News

wpDiscuz
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.