July 7, 2022

Dubai Week

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The oil market continues to rise in price. Lack of investment and difficulties in increasing production

The oil market continues to rise in price. Lack of investment and difficulties in increasing production

Oil analysts expect the rise in crude oil prices this week, following a five-week rise in geopolitical risks in Ukraine and Kazakhstan. Fear of the Omigron variable of the corona virus is reduced.
They explained that inflation was curtailed last week due to unexpected increases in crude oil and fuel stocks, which led to a slump in trade, while weekly gains were 2 per cent for two global benchmarks.
Analysts said crude oil prices had hit a seven-year high, with strong expectations for a barrel approaching $ 100 a barrel this year due to tensions on the Russia-Ukraine border. In addition to the ambiguity surrounding the position of the US administration in the event of a Russian invasion, it exacerbates price volatility.
In this context, Rose Kennedy, Managing Director of QHA Energy Services, told Al-Ektisadia, “Continued weekly gains for crude oil were due to declining fears of the Omicron variable, which had a lower impact on oil and fuel consumption. Russia – the largest producer outside of OPEC – could deliver only half of the planned increase in crude oil production in the next six months. “
He pointed out that the same crisis that some manufacturers in “OPEC”, especially African manufacturers, suffer from a lack of investment and difficulty in increasing production, is largely unresponsive to the majority of manufacturers in “OPEC +”. By increasing demand, especially by recovering fuel demand from the aftermath of the epidemic crisis.
For his part, Tamir Desperat, business development director at the Technique Group, an international company, says: In countries of consumption due to the continuous increase.
He said Russia would add about one lakh barrels of crude oil a day to the market each month, but the addition was halted last December, with a significant drop in drilling activity over the past year. In the first half of 2022 the actual month of Russia will not exceed 60 thousand barrels per day.
In turn, economist and energy law expert Peter Bacher says the “OPEC +” federation plays a key role in the balance and stability of the market and acts according to a careful and well-planned plan to restore production. The epidemic was halted during the crisis because the Coalition needed to pump 400,000 barrels, but the real increase in production has been slowed by factors ranging from domestic unrest to long enough investment in several producing countries.
He explained that last month – for example – “OPEC” increased its production by only 90,000 barrels per day, while Russia’s production began to stagnate last November, while “OPEC +” production declined in December. Without target development participation.
For its part, Arvi Nahar, an oil and gas expert on African Leadership International, points out that “OPEC has previously issued several warnings about the risks and consequences of the lack of new investments, especially in upstream projects.” International reports warn that the ongoing pursuit of its production targets “OPEC +” could have far-reaching negative economic consequences, especially if the current strong recovery momentum in global demand continues unabated. The “Omicron” variable of the corona virus is having a milder impact on the world economy than expected.
He pointed out that Brent crude prices have risen more than 10 percent since the beginning of this year and are likely to rise further in the coming months, citing estimates released by the “Vitol” group, which sees higher energy prices as a key factor. Rising inflation, and White House claims are expected to return. The “OPEC +” alliance will increase supply and help control fuel costs.
On the other hand, the International Energy Agency on Wednesday said oil supplies are expected to exceed demand soon because some manufacturers are expected to pump crude oil all the time or more, while demand remains high despite the spread of the strain. Omigron from the corona virus.
On the other hand, the US weekly “Baker Hughes” report on drilling operations tripled the number of active drilling rigs in the United States last week, bringing the total number of rigs to 604 because oil prices were slightly lower than their prices. The highest level in seven years.
The report points out that by 2021 this number will be 226 more than the number of active rickshaws, down from one oil-powered rickshaw to 491, while the number of gas-guided rickshaws increased by four to 113.
According to the Energy Information Administration, oil production in the United States last week was 11.7 million barrels per day, up from 11 million barrels per day at the beginning of 2021.
With the number of rigs in the Permian Basin declining by one last week, the Energy Information Administration has called for record production of more than five million barrels a day from the Permian Basin next month.
The report added, “There is no change in the number of rigs in the Eagle Ford, the second richest basin in the country, while there are a total of 292 rigs in the Bermion and 50 rigs in the Eagle Ford.”

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