High prices for “black gold” are needed, first of all, by the Americans. In addition to the economic factor (low prices “kill” American shale companies, making them unprofitable), a political factor comes into play a few months before the US presidential election. It is shale mining that guarantees the employment of millions of people – potential voters of Donald Trump, who, of course, would like to be re-elected for a second term.
Oil production in the USA since the conclusion of the OPEC + agreement has increased from 8 million 300 thousand barrels per day to 12 million, ahead of Russia and Saudi Arabia, which agreed to reduce.
As you know, oil prices are formed in the futures markets, where the share of physical oil, that is, supply contracts, is 5-10%. All the rest is “paper oil”, essentially speculative securities, the current quotes of which depend on the situation. Firstly, from the policy of the Federal Reserve, which regulates the price and volume of the dollar mass in speculative markets and, first of all, in the oil market. Secondly, from the US sanctions policy and other geopolitical instruments that remove large manufacturers from the market. If America needs oil no lower than 50-60, it will be like that, regardless of what OPEC + will do.
The task of OPEC + in Washington’s current concept is to free up markets for expensive American oil by removing cheap non-American, including Russian, oil from them.
There has indeed been a revolution in the global oil market. And it happened in the head of the main regulator. The United States realized that it had evolved from an importer of oil to an exporter. And if earlier the geopolitics of oil was subordinated to supply guarantees, then until recently the United States was aimed at capturing markets and destroying competitors by all possible means.
“America has not signed either the OPEC agreement or the OPEC + agreement, but Washington is the fastest responding to any crisis, because there are three thousand independent oil producing companies in the United States,” says former head of BP Robert Dudley. “And, of course, they must properly manage their cash flows, especially at a time like this.” It is very important. And tens of thousands of people who worked in the industry saw that such upheavals occurred in the 1970s and then in the 1990s, so the level of activity will be and the level of activity will change dramatically, which is why production in the USA has fallen so sharply “.
The Americans and their historic allies from Riyadh are taking steps right now to ensure that it is their oil companies that benefit from the escalating struggle to redistribute markets.
The US authorities also provide tax incentives to oil companies both as part of the general tax reform (income tax rates were reduced from 35% to 21%), and a reduction in royalties. Thanks to this, one-time 17 US oil and gas companies saved a total of $ 25 billion.