Media: Russia's influence in OPEC has weakened, the United States will soon collapse Russia's oil revenues

Media: Russia's influence in OPEC has weakened, the United States will soon collapse Russia's oil revenues

The US has found a way to reduce Russia's oil revenues, as well as reduce inflation. As President Joe Biden prepares for a visit to Saudi Arabia, the de facto leader of OPEC, U.S. officials are setting the stage for the kingdom and its neighbor the United Arab Emirates to push past their August production levels and announce further increases to help cool oil prices, which are above $110 a barrel. Source: Bloomberg.

Media: Russia's influence in OPEC has weakened, the US will soon collapse Russia's oil revenues

< p>At present, Gulf exporters, demanding regional security guarantees before agreeing to pump oil in never-before-seen large volumes, are still weighing their options, the sources said, asking not to be identified as the information is not public.

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Saudi Arabia is walking a fine line between heeding the pleas of its longtime but somewhat estranged US ally and co-architect of the alliance that saved oil prices from the biggest drop in history, Russia.

In a show of support for an increasingly ostracized country, Saudi Energy Minister Prince Abdulaziz bin Salman attended the St. Petersburg International Economic Forum, posing for a photo with Russian Deputy Prime Minister Alexander Novak and describing relations between the two capitals as “good.”< /p>

However, earlier this month, Riyadh also showed some sympathy for the plight of oil consumers, prompting the group to accelerate production increases by 50% in July and August.

“At OPEC a long history of pragmatism in a turbulent geopolitics,” said Bjarne Schieldrop, chief commodity analyst at SEB AB. “They want to be seen as a responsible player.”

Theoretically, the OPEC+ accelerated output schedule adds 648,000 barrels per day in each of those months. But this figure is largely symbolic, since most members of the Organization of the Petroleum Exporting Countries and its partners are unable to increase production further. Only a few Middle Eastern members have the only spare capacity.

Saudi Arabia and the UAE will still have approximately 2.2 million barrels of unused production per day after they reach the targets set for August of the current agreement, according to the International Energy Agency in Paris.

This is about 2% of global supply, and with soaring prices threatening to send the global economy into recession and sanctions against Russia, an OPEC+ member, causing further turmoil, consumers will welcome any relief they can get.

“Saudi Arabia may nod in favor of increasing oil production, but there is an understanding that there is now a limit to what they can do,” said Bill Farren-Pryce, director of Enverus Intelligence Research.

According to The Saudis are considering whether to go along with the request, according to people familiar with the talks.

Other OPEC+ countries are quietly exchanging views on how best to proceed, delegates say. Ministers will consider next steps either at an online meeting on 30 June or at the latest at the next meeting in late July or early August.

In the broader coalition, some members privately question whether the group should acknowledge its limitations by moving towards a less formal approach, delegates said. The production quota system in place since late 2016 could be relaxed, allowing a few countries with the capacity to produce at the level needed, some countries have suggested.

However, it is not clear whether Riyadh will approve such a transition, which has repeatedly stressed that world markets are reassured by OPEC's cautious management style. The kingdom wants a group-wide consensus decision as the next step, one delegate said.

Biden's visit will highlight how Russia's invasion of Ukraine has shifted the balance of power in Saudi Arabia's favor. Four years after he denounced the kingdom and its de facto leader, Crown Prince Mohammed bin Salman, as a “rogue” for killing critic Jamal Khashoggi, the US president needs their help.

Without additional Saudi barrels, there is little chance of curbing the inflation that is hitting the US economy. The kingdom's oil is also needed to support international efforts to isolate President Vladimir Putin over an invasion of Ukraine.

Background: OPEC is an organization made up of oil-exporting countries.

The mission of the international intergovernmental organization is to coordinate the oil policy of the participating countries, as well as to stabilize the oil market in order to ensure efficient economic and regular oil supplies to consumers, stable income to producers, etc.

OPEC member countries control about 2/3 of the world's oil reserves. They account for about 35% of world production and half of world oil exports. The proven oil reserves of OPEC countries currently amount to 1,199.71 billion barrels.

As of March 2020, OPEC includes 13 countries: Algeria, Angola, Venezuela, Gabon, Iraq, Iran, Congo, Kuwait, Libya, United Arab Emirates, Nigeria, Saudi Arabia, Equatorial Guinea. The headquarters is located in Vienna.

The unofficial format of OPEC + was formed in November 2016, due to the dissatisfaction of many oil-producing countries with prices in the world oil market.

As of April 2020, in The OPEC+ cartel includes 10 countries: Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, South Sudan (the key producer and informal leader of the cartel is Russia, with 14% of world oil production).