Daily Management Review

With Oil Racing Toward $100, India, US And Japan Tell OPEC+ Enough Is Enough


With Oil Racing Toward $100, India, US And Japan Tell OPEC+ Enough Is Enough
Oil-consuming countries have grown more concerned by crude oil’s rebound in the last year with its prices rising to $50 a barrel, then to $75, and currently at more than $85.
The alarm bells started ringing when Vladimir Putin, one of the OPEC+ cartel's leaders, warned that $100 a barrel was a clear possibility.
As rising inflation forces some central banks to raise interest rates sooner than predicted, the United States, India, Japan, and other oil-consuming countries are placing the cartel under the most intense political pressure in years to ramp up oil production.
According to reports quoting various officials and industry insiders participating in the discussions, an aggressive effort is being undertaken behind closed doors to encourage OPEC+ to accelerate its output increases.
The cartel, which is slated to meet virtually on November 4 to discuss its future strategy, is presently increasing output by 400,000 barrels per day each month.
On top of recent public appeals, private efforts by these countries are being made.
The Biden administration is growing increasingly concerned about rising gasoline prices, which have touched its highest point in seven years, and has been for weeks urging OPEC+ to produce more oil.
In late October, Japan, the fourth-largest oil user of the world, took the unusual step of joining such calls for the first time since 2008.
India, the world's third-largest oil consumer, has also requested more production of oil.
According to reports quoting diplomats, China has been absolutely quiet about the issue in public but is as outspoken in private.
 “We found ourselves in an energy crisis,” Amos Hochstein, the top U.S. energy diplomat, said this week, which is a view that is similar to that of big oil-consuming countries. “Producers should ensure that oil markets and gas markets are balanced.”
Officials from the United States, Japan, and India have met privately and have also gotten in touch with other major oil-consuming countries as well as producers. It was three weeks ago that such calls began to go out, but have recently picked up steam as oil prices have surged past the $85 per barrel mark.
The Japanese “government is currently asking oil-producing countries to increase production in the Middle East,” according to Tsutomu Sugimori, chairman of the Petroleum Association of Japan.
“As the petroleum industry, we hope oil-producing countries, including OPEC, will take appropriate steps so as not to hinder a full-fledged recovery of the world’s economy.”
Saudi Arabia and other oil producers have so far declined to move faster with increasing production, claiming that the monthly 400,000 barrel-a-day additions are sufficient to satisfy the world economy's need for oil in the aftermath of the epidemic.
“We are not yet out of the woods,” Saudi Energy Minister Prince Abdulaziz bin Salman said on Bloomberg Television last week. “We need to be careful. The crisis is contained but is not necessarily over.”