01 Roller Coaster
On Thursday evening, the international crude oil market suddenly experienced a significant surge, with WTI crude oil prices rising from $76.5 to $77.8 in just a short span of less than an hour and a half.
However, it was followed by a decline, falling to $75.65 by the close of trading in the early morning, and continued to drop on Friday, reaching a low of only $74.77.
But unexpectedly, by Friday evening, the oil prices rose again, reaching $77.1 billion by 00:40 at night.
A similar pattern was observed in the Brent crude oil prices.
In a trading period of slightly more than 24 hours, the international crude oil prices thus went through a round of ups and downs.
02 US Sanctions?
It is said that the sudden rise and subsequent fall on Thursday evening were due to some senators in the US Senate proposing to sanction OPEC for manipulating international oil prices.
Senators have stated that they observed OPEC members controlling global oil prices, which have a significant impact on high oil prices and global consumers. Therefore, they have made it clear to OPEC member countries that they will not allow anti-competitive practices to occur.
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In order to abolish the power of OPEC and its state-owned oil companies, they have proposed this new bill, hoping to gain approval from both houses of Congress and to be signed by President Biden.In October last year, OPEC+, led by Saudi Arabia and Russia, announced a significant reduction in production.
In February of this year, Russia announced another production cut, and subsequently OPEC indicated that it would not increase output to compensate for the reduction in Russian production. Saudi Arabia even suggested the need for an appropriate price increase.
Due to the many uncertainties surrounding future crude oil supply and demand, OPEC needs to observe the market more closely.
OPEC's reluctance to increase production has led many American politicians to believe that Saudi Arabia's stance is so aligned with Russia's, and it is clear that Middle Eastern countries are siding with Russia.
03, Saudi Price Increase
As the largest oil-producing country, Saudi Arabia not only does not support increasing production but has even raised the sales price of oil. The latest news is that Saudi Arabia will increase the price of crude oil shipped to Asia by at least 5% starting in April, while only maintaining the price for exports to the United States.
Since most of Saudi Arabia's crude oil is sold to a few Asian countries such as China, Japan, and India, the price increase for these countries has actually had the greatest impact on the rise in international oil prices.
However, it is understandable that oil-producing countries like OPEC act in their own interests.
Over the past few decades, although Middle Eastern countries have formed a petrodollar system with the United States, there have always been contradictions alongside cooperation.
Especially in recent years, due to the impact of the pandemic, global demand has shrunk, oil prices have plummeted, and the income of oil-producing countries has been significantly reduced.It was no easy feat that oil prices rose last year, but the United States has repeatedly raised interest rates, desperately pushing up the value of the dollar, which in turn has exerted a strong downward pressure on oil prices.
As a result, oil-producing countries in the Middle East have long been dissatisfied with this, which is why there is a continuous demand from the United States to increase production, while OPEC has repeatedly reduced output.
From all indications, the settlement system between the dollar and oil is showing increasingly large cracks.