Oil market cools down despite many risks

America and International Energy Organization (IEA) decided to release 240 million barrels of oil from its strategic reserve. While the current sanctions against Russia by Western countries are expected to remove about 2-3 million barrels of oil per day from the market.

As The National newspaper (United Arab Emirates) explains, it is not only because 240 million barrels of oil have been added to the market, part of the cooling down. oil prices The past few days also come from China.

Beijing currently imports about 20% of Russia’s total oil exports. However, the recent complicated developments of COVID-19 in China may reduce oil demand from this country.

Oil market cooled down despite many risks. Illustration.

Either way, the release of oil from the strategic reserves of the US or the IEA cannot be a long-term solution. It just seems like a temporary solution, or “buying time” to wait for more radical solutions, but according to the analysis of Al Jazeera (Qatar) newspaper, the US also has its own calculations with these problems. The step can only be considered as “buying time” as it is today.

Accordingly, the recently released oil from strategic reserves can help make up for the shortage of oil from Russia about 3-4 months, even 6 months. Washington hopes this period will help shale oil and gas companies be able to adjust their infrastructure to increase production. Traditional oil-exporting countries also have more time to improve productivity.

However, the risk is not without, especially when the release of oil from the US and IEA strategic reserves is currently considered too fast, too large.

Accordingly, experts are concerned that if things do not go as planned, the amount of oil from strategic reserves will be released too quickly and too large to make up for it. When it does, it will create a panic in the oil market more than what has been seen in the past. Strategic reserves have always been seen as the “lifesavers” of economies. No one wants to see lifebuoys running low.

At the same time, the Organization of the Petroleum Exporting Countries (OPEC) on April 11 warned that there would be no solution to make up for the shortage of oil from Russia. The statement was made in the context of a number of EU countries discussing the possibility of following the US in establishing an embargo on Russian oil exports.

According to the OPEC Secretary-General, what the market is seeing now is that the amount of oil cut off from Russia could be up to 7 million barrels per day, not 2-3 million barrels as previously calculated and the replacement 7 million bpd is impossible.

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