One wave comes after another!
Over the weekend, two diplomatic sources said that Saudi Crown Prince Mohammed bin Salman will visit Egypt on June 20 as part of a regional tour that will also include visits to Jordan and Turkey. Sources said the Saudi crown prince will meet with Egyptian President Sisi to discuss the impact of the Russia-Ukraine conflict on the region and preparations for US President Joe Biden’s visit to Saudi Arabia next month.
In fact, Biden’s plan to visit the Middle East has changed many times, and it may be wishful thinking for the Saudi Crown Prince to prepare in advance.
Biden was scheduled to meet with Saudi Crown Prince Mohammed as part of his first trip to the Gulf region as president. However, according to a Reuters report on the 17th, US President Biden said on the 17th local time that he would not meet with Saudi Crown Prince Mohammed bin Salman during his visit next month. Asked how he would handle the 2018 killing of Saudi journalist Jamal Khashoggi during his trip to Saudi Arabia, Biden said: “I will not be meeting with Crown Prince Mohammed. I will be attending an international meeting and he will be attending. .”
The cause of the oil price crash found? OPEC may use production to ensure safety
This past weekend, OPEC+ said that all production cuts cut by the organization in 2020 will be restored by August this year. Representatives from the 23 countries said they are now working hard to discuss next steps. As U.S. President Joe Biden prepares to visit Saudi Arabia, U.S. officials are paving the way for Saudi Arabia and the United Arab Emirates to increase production levels in August, hoping to help cool oil prices, people familiar with the matter said. Middle East oil exporters hope to exchange historically unprecedented crude output for U.S. guarantees of regional security and are still weighing their options.
Last Friday, U.S. oil rarely plunged nearly 7%, and Brent oil also fell by more than 5%. Last week, U.S. oil fell by 9.2% and Brent oil fell by 7.3%, both recording the largest weekly declines since April 1.
In this regard, Sun Zhenyu, research manager of Jinqiao Chemical Industry, said that judging from the disk performance, Friday’s plunge was the result of the joint efforts of the “triple” attributes of crude oil:
First, at the financial level, after the Federal Reserve aggressively raised interest rates, the market interpreted Powell’s speech after the interest rate resolution as dovish, and U.S. federal interest rate futures also began to price lower the Fed’s interest rate hike expectations, forcing the Federal Reserve to once again express its stance on suppression. Inflation determination. On Friday night, Powell said that “the Federal Reserve is very focused on restoring inflation to 2%.” Oil prices began to fall. Subsequently, many governors successively issued strong hawkish statements, continuing to support views such as subsequent interest rate hikes of 75 basis points, and the restoration of price stability. The commitment is “unconditional”, causing macro pressure to continue to increase.
Second, the geopolitical level is seeing light. Relevant remarks from Russia have loosened the geo-risk pillar that has been the strongest support for oil prices since the end of February, accelerating the flight of bulls. In the United States, the White House’s frequent statements about curbing inflation and suppressing oil prices have also allowed market participants to see the determination of the U.S. government. This is something that the Democratic Party has to continue to do in a passive state during the mid-term elections. The United States has experienced the most serious inflation problem in recent decades. The two Rust Belt states are currently not certain to support the Democratic Party. Biden can only try to win over them as much as possible. The most direct and effective way is to reduce inflation and energy prices.
Third, the fundamentals are also negative. At the supply and demand level, Libya stated that the blockade may be lifted soon, and OPEC+ is prepared to follow the instructions of the United States to discuss supply strategies, which further dampened the confidence of bulls.
Combining the above three factors, oil prices have plummeted. However, it is currently uncertain whether this is the turning point for oil prices to start a sustained decline. It is necessary to continue to track the follow-up progress of geopolitics and the policy advancement of the Federal Reserve and the White House.
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