OPEC Plus is trying to put together an oil production cut that will finally make the bears in oil go into hibernation just in time for the Holiday Season, says Phil Flynn of PRICE Futures Group.
The rumor suggests that the group may add another 1.0 million barrel-a-day production cut even as they have not completely solved the baseline quota issue with African nations. The UEA wants more, and Saudi Arabia wants to take it away from countries like Nigeria and Angola and give it to them.
The smaller countries do not want to give up their quota on the outside chance that somehow they may at some point in the future be able to pump that much. I guess you can still believe in Christmas miracles.
At this point, this dispute is unlikely to derail a deal. That is because Saudi Arabia has reminded the small producers that it is better to give than receive. Of course, it has been Saudi Arabia that has given more with its now famous lollipop 1.0 million barrel a day cut and that has supported prices that helped give revenue, not only to the OPEC pricing haves but also the OPEC producer have-nots. Yet the smaller countries feel that Saudi Arabia now owes them. They feel that because Saudi Arabia is the biggest producer, they can afford to support their struggling oil industry. They are dependent on Saudi Arabia’s charity, and they want them to pay their fair share.
As I write this there is not an official deal. Let’s assume that if we get an additional 1.0 million barrel cut that should put a floor under oil. While there is a risk of a “buy the rumor-sell the fact” retreat, there could be some who speculate this cut is a sign that OPEC does not believe their forecast of a global supply deficit. The reality is that if they get this done, it is a big deal.
During the Roaring Twenties in Chicago, in the land of the dollar bill, a man named Al Capone tried to make that town his own, And he called his gang to war, with the forces of the law [apologies to Paper Lace]. The Chicago Cops allegedly on the take from the bootlegging mobs, had to make a few arrests to make it look good to the public that they were enforcing the law. It seems like the Biden administration is doing the same thing after getting roasted by critics who have heavily criticized them for turning a blind eye to enforcing sanctions on Iran and lifting sanctions on Venezuela with only broken promises of free and fair elections.
The administration has been under fire for allowing Iran more access to billions of dollars from bank accounts even after they helped fund the evil Hamas terrorist group. They are under fire as they just sat idly by and let Iran be saved by economic collapse after they tried to appease the Iranian regime back into the very flawed JCPOA nuclear deal. Iran’s state-affiliated Tasnim News Agency reported a significant surge in the nation’s crude oil production output, reaching 3.115 million barrels per day in October a new five-year high.
So to avoid the critics, the administration is making a few public arrests. Yesterday the Department of the Treasury’s Office of Foreign Assets Control (OFAC) did as they “sanctioned over 20 individuals and entities for their involvement in financial facilitation networks for the benefit of Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and Iranian Armed Forces General Staff (AFGS), and the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). Iran generates the equivalent of billions of dollars via commodity sales to fund its destabilizing regional activities and support multiple regional proxy groups, including Hamas and Hizballah. MODAFL, the AFGS, and the IRGC-QF utilize intricate networks of foreign-based front companies and brokers to enable these illicit commercial activities and exploit the international financial system.”
There are also reports that Biden is having second thoughts about lifting sanctions on the Maduro regime after he failed to follow through on his promise of free and fair elections. Argus Media reported that “The US lifting of sanctions against Venezuela’s oil sector may prove to be rather brief, as Washington is threatening to reimpose some of the economic restrictions it waived barely six weeks ago. Washington is keeping Caracas to a 30 November deadline to meet political conditions associated with a waiver from US sanctions that have been in effect since 2019. President Joe Biden’s administration has demanded the release of three US citizens held in detention in Venezuela and the lifting of restrictions that prevent key opposition leaders from contesting next year’s presidential elections. Venezuelan president Nicolas Maduro so far appears to have shrugged off the US threat.
This comes as Defense Blogs reports that the Brazilian Ministry of Defense has announced the deployment of troops to its northern border as a preemptive “defensive measure” in response to escalating tensions between Venezuela and Guyana. The dispute between the two nations revolves around the territory of Essequibo, encompassing an area of 159,542 square kilometers rich in vital natural resources like oil, gas, mining, hydraulic, and forestry industries, all managed by Guyana. Venezuela’s Maduro regime plans to conduct a referendum on December 12, excluding the local populace, with the ultimate goal of annexing the disputed territory.
Learn more about Phil Flynn by visiting Price Futures Group.