June 25, 2022

Global diplomacy is working to stop oil above $100 a barrel

Countries’ concern over the rise in the price of a barrel of oil led influential countries such as the United States, India and Japan to apply diplomatic pressure on the Organization of Petroleum Exporting Countries (OPEC) to keep the price lower than the United States. $100 This figure, already proposed by Russian President Vladimir Putin, has alarmed countries that depend on imports of fossil fuels.

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In recent months, the price of a barrel has jumped from $50 to more than $85, affecting the global market and the rise of the dollar. Behind closed doors, there is an intense campaign by OPEC +, a cartel that includes Russia as one of its members, to increase oil production, and thus lower the value of the barrel. The cartel meets around November 4 to review its policies.

The covert effort is added to public appeals, given the scenario of high inflation and post-pandemic economic recovery. US President Joe Biden is concerned about the price of gasoline rising to a 7-year high and has been urging OPEC+ to produce more oil for weeks.

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Japan, the world’s fourth-largest oil buyer, joined the campaign in late October, the first move the Tokyo government has taken since 2008. India, the world’s third-largest oil consumer, has also called for an increase in fuel production. China is silent in public, but it is also active behind closed doors, according to diplomats.

“We are in an energy crisis,” said Amos Hochstein, the top US diplomat for the sector, echoing a view widely supported by major oil consuming nations. Producers need to ensure that the oil and gas markets are balanced.

American, Japanese, and Indian officials spoke discreetly and communicated with other major oil consumers and producers. Contacts began three weeks ago, but intensified in recent days, after the price of a barrel exceeded $85.

Tsutomu Sugimori, head of the Japan Petroleum Association, said the Japanese government was “asking Middle Eastern oil-producing countries to increase production.”

– We hope that the oil-producing countries, including OPEC, will take appropriate steps not to impede the full recovery of the global economy – he said.

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So far, Saudi Arabia and other countries have refused to escalate, arguing that the monthly additions of 400,000 barrels per day are enough to satisfy the appetite for oil in a global economy still suffering from the consequences of the pandemic.

“We are not out of the woods yet,” Saudi Energy Minister Prince Abdulaziz bin Salman said in an interview with Bloomberg TV last week. “We have to be careful. The crisis has been contained, but not necessarily over.