Oil storage tanks in Carson, California, April 25, 2020.
Oil prices surged on Friday (5), topping $57 per barrel. Reality suggests that the global oil supply is tightening much faster than many had expected. U.S. media analysis, the Biden administration to limit domestic oil production, the ultimate beneficiaries are the Organization of the Petroleum Exporting Countries OPEC (OPEC) and Russia.
According to Fox Business, China and India are the main drivers of higher oil prices, and their demand for oil has surpassed what it was before the outbreak of the Communist virus. The gap between oil supply and demand in the global market is expected to reach 2 million barrels per day by next May and remain for at least 12 months.
China’s demand for oil has remained high. Despite record oil purchases and efforts to stockpile oil, reports show that China’s oil stocks have fallen to their lowest level since February 2020. Meanwhile, U.S. oil supplies are tightening, with U.S. oil inventories falling to 475.7 million barrels last week, the lowest level since March 2020, according to the U.S. Energy Information Administration (EIA).
More seriously, the U.S. has said it will limit domestic oil production, which has shifted the center of power in the global energy structure back to OPEC and Russia.
Experts expect global oil demand to rebound to more than 100 million barrels by the end of this year and prices to exceed $65 per barrel. However, U.S. producers will only get a small slice of the pie, as they will be severely hampered by the Biden Administration.
Currently, U.S. oil production has fallen to 10.5 million barrels per day from 13 million a year ago. To improve “political correctness,” U.S. banks and pension funds are avoiding investment in the oil and gas industry, U.S. oil companies will have a harder Time getting approval for pipelines and other projects, and U.S. oil and gas industry production will be further reduced.
President Biden’s cancellation of the Keystone XL pipeline and the suspension of oil and gas leases on federal lands have led to thousands of workers losing their jobs, and now U.S. consumers will also face a sharp increase in oil prices, and the pace of U.S. economic recovery may be seriously affected.
The biggest beneficiaries of reduced U.S. oil production are OPEC and Russia. They will be in control of the oil supply situation, control the price of oil, and be protected from the threat of losing market share. On the other hand, the Biden administration’s climate policy will help OPEC and Russia to recover. While the U.S. is “sleeping”, OPEC and Russia will regain control of oil prices.
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