Don’t fight OPEC?

We say ‘Don’t fight the Fed’,
Perhaps Biden shouldn’t fight OPEC?
What a terrible politically motivated decision especially when the SPR is normally kept for emergency supply disruptions such as in case of a hurricane etc.

And he asks or even persuades other nations to join him in their own ‘release’.

Such ad-hoc ‘band-aids’ seldom solve and this releases will be soon forgotten.

Alas, the oil price rose 3% today.
Maybe short covering played a part as speculators bet on a larger dumping.

Biden just added supply this hurting his own U.S. drillers. With this type of decision, drillers are hardly about to make capex decisions to drill more.

This story also mentions how the replenishing costs may be detrimental to refiners.

Lo and behold, pending OPEC’s response in the coming months, the reflexivity of this scenario means oil prices make their way lower due to inflationary pressures crimping GDP growth.

Furthermore, Biden becoming worse at international diplomacy. His relationship with Saudi Arabia is dreadful (interesting Saudi and China) are close allies.

His relationship with Russia is awful. (And Russian troops gather around Biden’s mates in the Ukraine)

And China and Russia definantly cooperate.

To understand Oil, it’s worthy to watch how the world works.

November 24, 2021

by Rob Zdravevski

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