Experts Warn: Biden’s Strategic Oil Blunder Could Lead To $100 Oil

Joe Biden, Saudi prince, oil

A growing number of geopolitical and investing experts are now warning that Biden’s release of oil reserves was a blunder. The fear? OPEC+ still holds the key to production and should they the Middle East attempt to test Biden by limiting supply, oil could very well go to $100.

Last week, President Joe Biden announced releasing 50 million barrels from U.S. strategic reserves, in order to curb oil prices. What is more, the U.S. would release its reserves together with China, India, Japan, South Korea, and the UK.

While many may have expected oil prices to drop, they instead rose, after OPEC hinted at cutting supply.

On Friday, oil did indeed drop to $70. But, the drop in oil prices had nothing to do with Biden’s announcement and everything to do with investors panicking after the discovery of the Omicron COVID 19 variant. The new variant is believed to potentially be vaccine-resistant and, as such, it could impair global travel which would greatly reduce the demand for oil.

Yet, now that prices have rebounded, investors fear Biden’s move to release oil from the Strategic Reserve might have the effect of putting more pressure on the commodity. Experts are now warning that crude could again reach $100.

The reason for this is simple. The U.S. and other net oil importers can’t control the price of oil.

“The battle lines are being drawn,” told John Kilduff of Again to Bloomberg. “Certainly, OPEC and the Saudis can win this in that they are holding all the cards.”

OPEC Holds All The Cards

OPEC controls 40% of the world’s production of crude oil. Russia, an OPEC partner, controls another 12%. Furthermore, many of the Russian allies in Central Asia are net oil producers themselves.

This includes the former Soviet republics that now make up the Commonwealth of Independent States. These include Kazakhstan, which will produce some 86 million tons of oil in 2021.

On the other hand, the U.S. is the single largest oil-producing country in the world. However, its production only accounts for 18.6%.

It is clear that OPEC and its allies, with more than 50% of the world’s production, control the price. In fact, Biden’s release of reserves might just prompt OPEC to cut supplies.

If you see WTI get under $70, then I would expect a response from OPEC+,” Kilduff said.

What is more, the impact of strategic reserves cannot make up for production capacity.

“They can keep more oil off the market than an SPR release can put on the market” Kilduff added.

Once the U.S. depletes its strategic reserves, it will lose any ability to control the price. On the other hand, the only thing OPEC has to do is to slow down production.

The only option to cut the price of oil is to put pressure on the Saudis to increase production. However, that is something that Joe Biden is apparently unwilling to do.

 

The post Experts Warn: Biden’s Strategic Oil Blunder Could Lead To $100 Oil appeared first on Trish Regan’s Intel.

Click this link for the original source of this article.
Author: David Marsanic


This content is courtesy of, and owned and copyrighted by, https://trishintel.com and its author. This content is made available by use of the public RSS feed offered by the host site and is used for educational purposes only. If you are the author or represent the host site and would like this content removed now and in the future, please contact USSANews.com using the email address in the Contact page found in the website menu.

USSANews.com USSANews.com USSANews.com

A better search engine: DuckDuckGo.com.
Another search engine: Bing.com.
Visit our forum at Libertati.com.
Visit our store at TeaPartyGear.com.

Follow us: