The Kingdom has returned as the most important swing producer and influential marginal price-setter. But how long this situation will last is unclear.
Fluctuating Chinese demand has contributed to this year’s volatility in international oil prices. But the latest evolution on the supply side will have immediate geopolitical and financial implications that go well beyond the oil market.
First, the longstanding dominance of OPEC, de facto led by Saudi Arabia, faded because of the explosive growth of shale producers – including in the United States. The swing-producer role that is critical to curtailing large price overshoots in either direction thus moved to them and away from Saudi Arabia and its OPEC allies.In an attempt to restore OPEC’s influence on the oil market, Saudi Arabia and Russia agreed in 2016 to establish an expanded output-quota arrangement.
There is perhaps no better illustration of Saudi Arabia’s return to energy-market dominance than US President Joe Biden’s reported plan to visit the Kingdom – part of his efforts to reduce the energy-price burden on Americans ahead of November’s midterm congressional elections. Yet, as dramatic as this shift undoubtedly is, the new oil-market configuration is fragile, which the Saudi authorities recognise, especially given the rollercoaster ride that oil prices have been on in recent years. There are already signs that high prices are hitting demand both directly and indirectly. The moderation of consumption will be accompanied by the encouragement of more efficient energy use, a tendency that the renewed emphasis on energy security will amplify.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Brisbane's petrol prices tipped to hit record highs, drivers told to fill up nowPrices are following a global trend, with high oil prices driven by the war in Ukraine and China easing its COVID-19 restrictions and increasing its demand for oil.
Read more »
PGA Tour suspends all golfers competing at Saudi-backed LIV eventThe 17 PGA players competing in the Saudi-backed LIV Golf Invitational Series have been suspended by the tour
Read more »
PGA bans some of golf’s biggest names for signing with Saudi-backed tournamentThe series began in front of mediocre crowds and surrounded by scandal because of its links to so-called sportswashing from the Saudi regime, which has attracted fierce criticism over human rights abuses.
Read more »
Phil Mickelson defends Saudi-backed LIV Series but will not quit PGA TourPhil Mickelson stressed he does not condone human rights violations ahead of the first Saudi-backed LIV Golf Invitational Series event at Centurion Club
Read more »
What is the LIV Golf Series and how will it work?Saudi-backed events threaten major disruption to golf’s old order, though top players are not signing up in numbers for now
Read more »
US tourist throws scooter down Rome’s Spanish Steps, causing €25,000 damageIncident at world heritage site comes fortnight after another tourist drove a Maserati down the steps
Read more »