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2022-07-28 Caucasus/Russia/Central Asia
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West and oil: who can increase production
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Direct Translation via Google Translate.
Written by Russian writer Pavel Kukhmirov. Kukhmirirov also is a former Donbass militiaman.
[Sevastopol] The United States has proposed imposing sanctions on China's purchase of Russian oil. This proposal was made by US Senator Rubio. In addition, US senators from the Republican Party called for sanctions against insurers of tankers transporting fuel from Russia to China.
The West continues to stubbornly prevent the export of Russian energy resources. But the longer this happens, the more relevant the question becomes, what to replace them with. And the options are limited.
For example, the states included in the OPEC + deal have already increased production by 297 thousand barrels per day (b / d) by mid-summer. More than 60 percent of this increase was provided by the main countries of the Persian Gulf - they accounted for 229 thousand b/d. But despite this, the level of production of OPEC countries is now lagging behind even the level of 2020, the period of the collapse of the old OPEC + deal at the start of the COVID-19 pandemic. The main Gulf countries then pumped 2.4 million b/d more than they do now. And other participants in the OPEC+ deal, too.
In America itself, oil production in mid-summer was at around 12 million bpd. This is the highest figure since the beginning of the coronavirus pandemic (before which production in America reached 12.8 million b/d).
However, for the oil market, the key indicator is the volume of exports, which now objectively cannot consistently exceed the level of 3.5 million b/d even with an increase in production. And this is almost two times lower than last year's level of 6.5 million bpd.
This situation is caused by infrastructural restrictions, as the US government organization MARAD is torpedoing the issuance of permits for the construction of deep-sea oil terminals for tankers with a carrying capacity of more than 1 million b / d. This is the environmental agenda of the ruling Democrats. As a result, the volume of US exports is already inferior not only to Saudi Arabia, but even to the Russian Federation, which was forced to reduce production by 850,000 b/d compared to the beginning of the year.
Based on this, purely technically, the same main countries of the Persian Gulf now have more opportunities to increase the supply of oil. There, mining is carried out by monopoly companies, united with local energy regulators. And the structure of production there contributes to this: flowing wells powerfully facilitate the process itself.
But at the same time, production growth rates will not be able to exceed the volumes of already established quotas, even if they will now grow by 648,000 bpd every month. OPEC countries have their own interest: they are concerned about the risks of falling prices due to too rapid growth in supply. And they are not interested in increasing it too much.
The same major Gulf countries are producing a total of 76,000 b/d less than the available quota by mid-summer, while the other countries of the OPEC+ deal also produce almost 1 million b/d less. This is equal to 1 percent of total global oil consumption. And it's weighty. Very weighty.
If the price of oil is kept above $85 per barrel, America will strive for pre-pandemic production levels. But this year, American producers are unlikely to be able to seriously increase exports due to the same infrastructure restrictions.
So in the coming months, the Russian Federation is quite capable of maintaining its existing share in the European oil market. If anything: it is 26 percent, despite the fact that the United States has 12 percent, and the main countries of the Persian Gulf have 6 percent.
How the current Russian Federation will take advantage of this natural advantage is a separate issue.
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Posted by badanov 2022-07-28 00:00||
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