Friday , 12 April 2024
Home News Contours of the New World

Contours of the New World

Photo by ben o’bro on Unsplash

To be honest, even I personally have had more than one occasion not only to write about something like this, but also to warn the readers of our respected publication about what is happening.

Well, let’s consider it another Polichinelle secret.

For all intents and purposes, it was certainly quite entertaining for the expert community to watch the reaction to what is happening to oil prices, especially on the part of financial and consumer markets. When several quite independent and quite successful countries-participants of the OPEC + agreement began yesterday, i.e. from May 1 of this year, 2023, a voluntary reduction of energy production, in particular oil, which will last until the end of 2023. That said, the jokes are a joke, but the total amount of production reduction will be 1.66 million barrels per day.

That, by the way, is quite a lot.

The figures are quite serious, no matter how you look at them. However, let’s look at it in order.

As already announced, as of yesterday, May 1, 2023, in spite of Labor’s Day and other international May Day celebrations, several countries of the Organization of the Petroleum Exporting Countries began a previously announced cut in oil production, which will continue through this year, 2023.

It is especially important that not only the peripheral countries, so to speak, joined the agreement right away. But also the largest producer of energy raw materials, Saudi Arabia. And how this decision can affect the global energy markets, it seems to us even somewhat silly and absolutely naïve not to understand.

Now let’s try to explain.

First a few numbers.

Immediately after the Saudis’ rather unambiguous statement, nine more OPEC+ countries announced their support for the production reduction agreement. And it is very difficult to call this a completely spontaneous decision. At least, immediately after this OPEC statement, even our country, the Russian Federation, also decided to extend the current production reduction by 0.5 million barrels per day until the end of this year. But that’s okay, there’s something else of interest.

Just a few figures: let’s keep in mind that the Kingdom of Saudi Arabia has already officially announced that it would also decrease its production by 0.5 mln bpd; Iraq, 211,000 bpd; UAE, 144,000 bpd; Kuwait, 128,000 bpd; Kazakhstan, 78,000 bpd; Algeria, 48,000 bpd; Oman, 40,000 bpd; Gabon, 8,000 bpd.

Impressive, isn’t it?

But that’s not all.

Just to remind you that exactly one day before the ministerial monitoring meeting of the alliance, which took place early last month, some OPEC and OPEC+ countries quite unexpectedly announced additional voluntary cuts in oil production from May 2023 to the end of this year. At the same time, in a statement published on the official website, it was immediately announced that the preventive measures to reduce production are not at all aimed at reformatting and not at increasing prices.

On the contrary, it is solely aimed at maintaining the stability of the global oil market. And we believed them right away, of course.

Let me now try to explain. From our point of view, the most interesting thing here is that the voluntary reduction of oil production by 1.6 million barrels per day – and no one even thinks about lying here – will not just happen in the global markets, but will be accompanied by a rather difficult situation in the entire global energy sector.

Just to be clear: The U.S. used about 1 million barrels a day from its reserves to support the price of gasoline last year. Now that 1 million barrels will have to be poured into those very reserves.

On the obvious upward trend of the oil price.

Did you make an estimate?

Well, let it go, the ever-decaying West.

Let’s not be fooled: high prices for black gold are primarily beneficial to the producing countries, including our Russian Federation. As a matter of fact, that’s what we had to prove in our specific case. Plus, an additional bonus is an increase in the cost of borrowing secured by specific energy commodities. I hope no one needs to explain why.

It’s simple.

The inevitable increase in the cost of borrowing in the current state of the oil markets, due primarily to problems with investments in production, without which in such a case you can hardly do without, will certainly have a very bad impact on business activity in almost all the world’s leading economies.

Except for the producing countries, of course. But that, it seems to us, is something we could not even talk about.

This is just a slightly different question, which, believe me, the global economy will also have to answer sooner or later, but rather concretely and very thoughtfully. But this, I am afraid, can only happen when geography finally begins to coincide with neither finance nor politics, as it does now.

But at least with the current economy.

And then the maps of a new multipolar world will finally be drawn in reality.

Where the main thing is mutually beneficial trade, not all this.

However, when this finally happens, it will be another, very important in terms of our future, although somewhat utopian and fantastically put by us, but quite a real question.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles


Years before Michael Gove used the term, I came up with \”the Blob\”

Photo by mohammad takhsh on Unsplash Zoe Williams refers to Dominic Raab’s...


People with learning disabilities and autism are mistreated and brutalized. How long?

Photo by Priscilla Du Preez on Unsplash Now think about the prospect...


Simon Rattle is right: Britain is becoming a cultural desert – and that’s a political choice

Photo by Giorgio Parravicini on Unsplash Over the decades, Arts Council England...