An OPEC+ oil production cut is coming right up, reports say.
This benefits two countries: Saudi Arabia, the leader of OPEC, and Russia, the +.
The Russian benefits are obvious: Increased pain on the West, along with, perhaps, letting China and a few other countries know they can't exploit its predicament too much. (Since Russia is also a net food exporter and Xi Jinping is blowing his top about Chinese food security, this has other angles, too.) Currently, Russian oil has been trading at as much as a 30 percent discount. So, tightening the market means the degree of discount will also drop.
The Saudis? Mohammad bin Salman, fresh off his international diplomatic immunity from being named prime minister, can keep Warmonger Joe Biden dancing like a fist-bumping yo-yo. This has added importance with the breakdown of a ceasefire in Yemen.
This is beyond the issue of simply addressing sagging gas prices.
The story above notes that purely domestic American issues had already brought a halt to declining gas prices in much of the country, though some stores here on the Red dropped a cent again in the last few days. It's ... interesting that Nevada (and I assume the story is overlooking Hawaii and Alaska) has the nation's most expensive gas outside of California.
And, although Inflationary Joe hasn't much reduced food inflation, even with the drop in gas prices, his chances of doing so decline even further with this. And, of course, Democratic Congressional political chances. (Hit the polls at right to offer your thoughts.) This will probably also further crimp the possibility of massive LNG exports to Europe this winter; my take on that is here.
Climate Change Joe, meanwhile, is talking about trying to limit American oil majors from exporting refined gasoline. Good luck with that one.
What about the Strategic Petroleum Reserve? Biden can still release more from it, but — and I did not know this before — due to various national and international legal obligations — it can't go below 250 million barrels. It's just short of 420 million now.
In other words, at Gas Pump Joe's rate of 1 million barrels a day during past releases, he's got a bit under six months' cushion left. Vladimir Putin will still be rolling dice at that time.
And, the real issue is not just the SPR, but the psychology behind it. As Biden's margins get narrower, getting the SPR closer to its 250 million barrel flatline, the market-influencing power of releases wanes.
Will oil hit $100/bbl, as this story speculates? I doubt it, at least not hitting there and staying there, but trading in the $90-100 range? You bet.
Meanwhile, a final thought on the first story. So-called "NOPEC" legislation to sue OPEC for market manipulation? Even if it DID pass Congress, it's nugatory. How would the US enforce it? Especially since it has opted out of so many international institutions. And, if it tried to, Saudi investments in US defense kit would dry up and blow away to Beijing.
In similar veins of stupidity, first referenced by me a week ago, is the EU's attempt to put a price cap on oil that originated in Russia, as a backdoor sanction. Here is how stupid that is.
