India once again urges OPEC+ to increase oil supply
Recently, India once again urges OPEC and its allies to resume suspended oil production capacity. The world’s third largest oil consumer has a strong demand for energy. The surge in prices expressed “deep concern”.
According to an announcement posted on Twitter, Indian Oil Minister Dharmendra Pradhan told senior OPEC officials during a video conference on Thursday: “High oil prices have brought huge inflationary pressure to India. .” He called for “affordable” supplies with prices within a “reasonable range” and reiterated his call for OPEC+ to increase output.
As demand rebounds from the collapse of the epidemic, international oil prices have soared above US$75 per barrel, reaching their highest level in two years. However, Saudi Arabia has said it will only cautiously resume production when the oil-producing group meets next week as the market remains fragile.
For India, the current pressure is particularly serious. Given the steady depreciation of the rupee against the US dollar in recent years, oil prices are quickly approaching 5,550 rupees per barrel, only 10% lower than during the market frenzy of 2007-2008. Petrol prices in Mumbai hit a new high last month, although much of this was due to higher taxes.
This is not the first time this year that India has expressed concerns about OPEC’s output policy. In January 2021, Pradhan told OPEC Secretary-General Mohammad Barkindo at a public meeting that the organization’s policies “are creating chaos in consuming countries.”
How long can oil prices continue to rise?
Oil prices have risen sharply recently. Crude oil prices have continued to rise this week. In the past month, WTI prices have risen from US$66/barrel to about US$74/barrel; while Brent crude oil has touched US$75/barrel many times, reaching a high in more than two years. Boosted by international oil prices, domestic crude oil futures were relatively strong on June 24. As of the close, SC crude oil closed up 0.89%, closing at 465.5 yuan/barrel; low-sulfur fuel oil closed up 0.23%, closing at 3,493 yuan. / ton; LPG operated strongly at intraday highs, and finally closed up 1.93% to close at 4,701 yuan / ton.
In the international crude oil market, the new round of OPEC+ meeting to be held next week has become a hot topic in the market. The meeting will determine the pace of production increase in the next three months. There is news that OPEC+ may increase crude oil production by 500,000 barrels per day. However, market participants believe that although Saudi Arabia and its OPEC-led group control crude oil supply and market price stability, the U.S. dollar and the Federal Reserve’s monetary policy are the real key factors. The extremely loose monetary policy in the United States has had an unpredictable and serious impact on oil prices.
“Judging from the total volume and pace of market production increase in May, the current increase in crude oil market supply is less than expected. Judging from the contribution of OPEC member states to increase production, it mainly lies in Saudi Arabia. Saudi Arabia’s monthly production increased by 350,000 barrels per day in May, but the overall contribution of other member states was limited. In addition, the return of additional Saudi production cuts was slower than expected. According to the previous plan, the total increase in production in May was 600,000 barrels /day, the total increase in June will increase by another 700,000 barrels per day, and in July by 800,000 barrels per day, the cumulative planned production increase will reach 2.1 million barrels per day within 3 months. Therefore, the market is optimistic about the supply-side increase in production. Concerns have slowed down, and there are situations where reality is worse than expected.” said Zhong Meiyan, director of energy and chemical industry at Everbright Futures Research Institute.
Zhong Meiyan believes that if OPEC+ continues to increase production, it will change the subsequent monthly supply and demand balance sheet of crude oil, causing the balance sheet to shift from a shortage of monthly equivalents to a balance or a slight surplus. , putting pressure on high oil prices.
In the view of Yu Pengsen, an energy and chemical researcher at Zhaojin Futures, the 500,000 barrels per day of crude oil production planned by OPEC+ will account for about 0.5% of the total global demand and OPEC’s + 6.25% of the current idle capacity. This is a process of slow increase in supply as demand recovers. “The more practical impact of this plan is to alleviate the current relative shortage of supply in the oil market, but it is not enough to completely make up for the expected gap. After increasing production by 500,000 barrels per day, there is still a supply gap of about 1 million barrels per day.” He explain.
“When OPEC+ began to gradually reduce production cuts at the beginning of the year, they reached a basic agreement. If the production increase is resumed, the monthly production increase will not exceed 500,000 barrels per day. At the OPEC monthly meeting in April, it was agreed that OPEC+’s overall monthly crude oil production would resume to 500,000 barrels per day. At the same time, the additional 1 million barrels of Saudi Arabia’s early production cuts will be returned in three months. Judging from the actual operation of the crude oil market in the first half of the year Look, this production increase rate basically guarantees a balanced state of slightly tight supply in the crude oil market and will not have a big impact on oil prices. Therefore, before this OPEC meeting, everyone temporarily proposed such a production increase plan. According to the current market supply Judging from the degree of tension, if the uncertainty of the return of Iranian crude oil is eliminated, OPEC’s continued implementation of the monthly production increase of 500,000 barrels per day after August will not put a lot of pressure on the supply of the crude oil market.” Haitong Futures Energy and Chemical R&D Director Yang An said.
In fact, according to the analysis of supply and demand in the crude oil market, the current supply and demand in the crude oil market is becoming increasingly tense. Yang An introduced that as the northern hemisphere, including China, the United States, and Europe, enters the peak summer consumption season, supply shortages are getting increasingly worse. This is also the core reason why oil prices have shown a very strong trend recently, because there is no accurate assessment data on the specific demand for crude oil. , now each agency has specific quotas for supply shortages.� Often uneasy. June 23 is the seventh working day of a new round of oil price adjustments. Not surprisingly, on the evening of June 28, domestic refined oil prices will see another increase, which will be the ninth increase this year. Car owners are likely to once again face a unit price of refined oil above 7 yuan.
According to data from Zhuochuang Information, as of the morning of June 23, the change rate of crude oil was 4.19%. It is currently expected to increase the oil price by 175 yuan/ton, which is equivalent to an increase of 0.14 in liters. yuan/liter – 0.15 yuan/liter. According to the current oil price, No. 92 gasoline may enter the “7 yuan era”. Some cities with relatively high prices will break away from the “7 yuan era” and move towards the “8 yuan era” . According to estimates, after the current round of refined oil price adjustment window opens, car owners may have to spend an extra 6 yuan or more to fill a tank of oil. </p
