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Why is oil price high, the Middle East still tightens production?

Anh Phuong (VTV reporter residing in the Middle East)Saturday, May 28, 2022 10:55 GMT+7

Price oil above USD 100/barrel is forecasted to be a long story. To address the current situation, many concerns are being directed to the Middle East. According to an independent survey, four Middle Eastern countries: Saudi Arabia, the United Arab Emirates, Kuwait and Iraq still have room to increase production by about 4 million barrels per day.

Oil rigs are still operating in moderation in the desert of the United Arab Emirates. This land is supplying the market with about 3 million barrels of oil per day, nearly 1 million barrels lower than its own production level in 2020.

In 2021, the country even still aims to gradually increase production to 5 million bpd. However, when the Russia-Ukraine tension made the world most thirsty for oil, the plans to increase production were quiet.

Why is oil price high, the Middle East still tightens production?  - Photo 1.

An oil facility in Saudi Arabia. (Photo: Reuters)

“What the OPEC countries want is to avoid Moscow selling cheap oil to the market. If so, an agreement must be maintained with Russia. If Russia goes its own way now, the world will be divided in two. oil market. One market follows the rules of supply and demand with the role of OPEC, but the other market will be flooded with low-priced Russian oil,” said Mr. Narendra Taneja, an energy expert.

High oil prices, damaging growth will hurt oil demand. However, by increasing production and lowering oil prices, OPEC will again put itself in a position to face unpredictable variables. OPEC countries still cannot forget their oil price war with Russia at the beginning of 2020, pushing oil prices to negative levels at times.

“Oil with countries like Kuwait, the United Arab Emirates or Saudi Arabia is a strategic commodity. Meanwhile, Russia currently accounts for 12% of the world’s oil production. It can only be with Russia, they can only create its influence,” said Mr. Narendra Taneja, an energy expert.

In the Middle East, Iran is also one of the potential oil suppliers. Tehran wants to supply oil to the market to revive its embargoed economy. However, after statements that were once very optimistic about the possibility of reviving the 2015 nuclear agreement, things still stood still.

“Finally, Western countries must also accept the fact that they cannot exclude Russia from many important world problems. For example, it is impossible to ignore Russia’s voice in negotiations on The Iran nuclear deal is happening in Vienna. Because of the fact that Iran is closer to Russia,” Dr. Spiridon Plakoudas, an expert on Middle East affairs, said.

It is estimated that 3 billion people around the world today are said to be living in poverty. But when oil is becoming the main tool for pressure by all parties, it is not difficult to predict, the Middle East will not want, or even want to, dare to make a breakthrough in the market. oil field.

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