Energy expert Boris Martsinkevich talked about the repercussions of the decision of OPEC + countries to reduce oil production on the markets, and will the decision lead to fueling inflation in the world? and whether the decision was taken for political motives.
What is behind the countries in “OPEC +” production cuts? Political or economic motive?
Boris Martsinkevich, editor-in-chief of the “Geo Energetica” website specializing in energy affairs, said in an interview with RT: “It seems that the aim of the production cuts is for oil prices to be at a comfortable (acceptable) level for oil consumers and producers. And in light of fears of an economic recession in The United States, the European Union and the problems in the banking sector caused by the central banks raising interest rates, the decision is very logical.”
The energy expert added that the producing countries in “OPEC +” have risen to the point that the growth of the Chinese economy will not outweigh the negative trends prevailing in the economies of developed countries, so countries in the group decided to reduce production in a preemptive step, and he said: “It seems that (OPEC +) sees that relying on That the growth of the Chinese economy after the pandemic will outweigh the negative trends in America and Europe has no meaning, so I decided to reduce production, as the accumulation of surplus production would have led to a decline in oil prices, which is not in the interest of the crude-producing countries.
He pointed out that oil prices, after the announcement of the decision, rose to a level between 80 and 90 dollars per barrel, which is a comfortable level for consumers and oil producers in the world.
Will the United States raise its oil production?
Expert Marcinkiewicz believes that US energy companies will make a decision based on their economic interests, which may conflict with the political interests of the US leadership.
He said: “In the United States, private companies extract oil, not the government, and the decision to increase or decrease production is taken by these companies, not the American president or the political blocs. How will American energy companies behave? I think they will proceed from their economic interests, as experience has shown that the economic interests of companies do not They usually coincide with the political interests of the American leadership.”
The expert added that US energy companies are in a comfortable position when the price of a barrel of US oil is above $80, indicating that US producers will not increase their production, which will lead to higher fuel prices in the US.
He pointed out that the US government does not have tools to influence gasoline prices in the country, as it has depleted about 40% of the strategic oil reserves, and the US government’s decision to fill the reserves at $70 a barrel did not receive a deaf ear from US energy companies.
Will production cuts stoke global inflation?
The veteran energy expert stated, “Oil prices in 2022 ranged between 80 and 90 dollars a barrel. Now prices have returned to the same level, and therefore there are no major shifts (in the global economy) this year.”
The expert explained that “inflation in the United States and Europe is not linked to oil prices only, as the course of events in all markets affects the index. If this strategy changes, inflation will continue to rise.”
Martsinkevich pointed out that the rise in inflation in European countries to a double-digit figure is not because of Russia or “OPEC”, but rather a result of years of wrong policy pursued by Europe in the field of energy, and he said: “I do not think that oil will significantly affect inflation in the United States.” or Europe.”
Last Sunday, Russia and eight OPEC + countries announced simultaneously and unexpectedly an additional cut in oil production by about 1.65 million barrels per day, starting from next month, to achieve stability in the global energy market.
Voluntary reductions will begin next May 2023 and will continue until the end of the year 2023. The move led to an immediate rise in the price of black gold by about 5%.
This article was originally published by RT.