#ForexChief #oil #forexnews #OPEC #worldnews #Market #stock ⠀
🛢️ Six lessons of the oil market
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⚡ Geopolitics has forced producers and consumers to seek a new balance and build new global logistics. Military conflict in Europe and fears of a global recession have turned the oil market into a dangerous casino. Investors have already withdrawn more than $129 billion of «active» capital from the commodity market.
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So:
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Renewable Energy Sources Cannot Replace Fossil Fuels.
Solar and wind energy cannot be sustainable sources of electricity − we have to find out if governments will understand this and how they will save the situation.
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Saudi Arabia will not save everyone.
The
OPEC+ alliance refused to increase oil production to lower prices. The Saudis put their economic interests ahead of geopolitics if the problem does not concern their territory.
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OPEC can't count on help.
Cartel members are experiencing a decline in production capacity and cannot produce as much oil as the established production quotas allow. Moreover, there are no resources to increase volumes to reduce prices.
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The US Can't Stabilize the Market.
It takes more time for US producers to increase production than five years ago. The current level is already at the limit.
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Key Market Driver – Demand in China.
China continued to pursue a «zero tolerance» policy in the fight against COVID-19, so global demand did not exceed supply in 2022. It is not worth counting on a quick recovery after the opening of the Chinese markets.
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Developing countries need Russian oil.
If earlier Russian oil «fed» Europe, now it flows to Asia. Bulgaria, China, India, and Turkey are ready to buy raw materials from Russia, albeit at a huge discount. Even if Europe and Russia resolve the differences, Russia will continue to supply energy to Asian markets, and the new market balance will take this fact into account. Russia does not intend to cut production yet.
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Let's see what happens.
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Profits to y’all!