The OPEC+ Oil Cut: Who's Calling the Shots???

Hello everybody and welcome to Geopolitical Trends. My name is David Oualaalou. So good to be with you as always. OPEC+ agreed to cut production by a total of 3.6 million barrels per day. Whoever saw this coming? I'm sure the West didn't see this one coming this way anyway. Is this the reason why US Secretary of State is heading out to Saudi Arabia next week. That's a very interesting dynamic. So in this video, I'm going to provide you my insights, as always, as, as to how this decision not only further sort of, uh, confirmed the shift of Saudi Arabia, which is the lynchpin of OPEC in this case, towards the east, but also how the global energy market is receiving the news. But before I'll delve deeper into this topic, I'd like to extend my thanks to the channel's members and supporters and to you, of course. But if this is your first time landing on my channel here, please make sure to subscribe and smash that notification button so you will be notified every time I upload a new video. Let's delve in into this. The Russian Deputy Prime Minister Alexander Novak, which by the way, he's the one in charge of the energy policy for Russia, you know, stated on that just yesterday stated that the meeting of the OPEC+ that just took place in Vienna, uh, reached the decision of reducing production by 3.6 million barrels per day. Even the Saudi energy minister, Prince Abdulaziz bin Salman, he said, and I quote, let me get you guys quoted, the decision of the OPEC+ alliance helps to enhance the chances of stability of oil markets, and his country would voluntarily cut its oil production by 1 million barrels per day starting in July. End of quote. We all see what it means. Saudis defies the United States. They don't care what America is asking for. I mean, we all remember when President Biden went physically to Saudi Arabia asking them to increase oil and they shut the door on his face. So the Saudi prince, by the way, added that, uh, that— and that was during a press conference, uh, during this OPEC meeting. Plus he said that this measure, this measure of cutting oil by 1 million barrels per day— this is for just Saudi Arabia— But the total of the OPEC+ will be— in total, it will be 3.6 million barrels per day. So what the Saudi energy minister said is that this measure by the kingdom will take effect starting next month for a period of 1 month, and it could be— here's the keyword— extended. There is a subtle message right there. That's his way of telling that the Saudis do not care what the Americans are saying, but also Saudis are thinking in terms of where the next market is. And why am I saying this? I'm saying this because most of the estimations, at least the one I looked at in the energy market, suggest that China's demand for oil is only gonna keep increasing. So is the Saudis hedging their bets? I think so. So the second question that we need to think about, especially for us here in the United States, more so than other countries in the United States— summer travel. Summer is coming here, summer is almost here anyway, and with it comes a lot of sort of extensive travels for travelers that this— they prefer to drive instead of using the planes because the cost. Well, even drivers now during the summer season They're going to feel the pinch at the gas pump. And once again, is this why the Secretary of State is going to Saudi Arabia to beg for them not to cut production? But I think it's too late. It's because we have lost credibility. Now, any country you ask, hey, can you do this for us? What are they going to say? Sorry, we can't. It's because our strategic interest are at stake. This is the idea of why I believe he's going to Saudi Arabia. So here's the thing, uh, uh, for the Saudi, uh, energy minister and the Russian, uh, Deputy Prime Minister Novak, they both agreed that this decision, uh, by the alliance is aimed at one thing, and is to ensure the stability of the oil market. And prevent any, any sharp fluctuation in crude prices, either up or down. You all remember in 2021— or 2022, rather— oil prices hit $140 a barrel. So not anymore, because this is now why the OPEC+ decided to do this. And as a matter of fact, the Russian official Novak, that is, added, and I quote here, we see that the oil market is balanced in one way or another, and we noticed an increase in demand, end of quote. What do you think Alexander Novak is hinting at? Is hinting at the oil prices because the increase of demand and of course the, the, the cut in production, what is going to do to prices? Is going to go up. And given also what's going on in Europe, because Europe is in a massive energy crisis, mark my word on this, the media is not releasing the information. It's almost, I feel like, there is, there is a blackout on the information, you know. And that now, it's, it's kind of hinting at really at the major challenges for the EU economy. I'm gonna do a video for you guys about specifically Germany. How its economy could collapse because lack of access to cheap energy. I'm gonna do it within a few, in few days. So what I'm reminded here, and again, I am a student of history, I am reminded of what the Saudi energy minister once said, and he said, and I quote, you know, the Saudis, or the kingdom rather, derives pleasure from keeping everyone on their toes, end of quote. Once again, it's a subtle message. Remember, uh, this is a message for not only the West but the US as well. You know, it's because we, the United States, including the intelligence community, we were trying for years and years to find out the exact reserves of the oil in Saudi Arabia. We couldn't. We have not succeeded in ensuring that. When we used to— I used to work in Saudi Arabia on behalf of the US government. We will meet with the Saudi officials in the government and all that. They will tell you what you want to hear, but they will never disclose the accurate information. And there is a reason for that. That's why we don't know what the Saudis' reserves of oil are, and they are massive. So that's why they are in possession to either cut or increase production however they feel like it. So I found the quote by the energy minister very interesting. Let me repeat that again. So let that sink in. The kingdom derives pleasure from keeping everyone on their toes, end of quote. And once again, this is where I found the trip, the upcoming trip rather, of the Secretary of State to Saudi Arabia aimed at one thing and one thing only. The media, of course, gonna be saying, no, no, no, he's going there to talk about, uh, sort of, uh, uh, the Yemeni conflict because Saudis are part to it and all that stuff. The, the reason, the truth of why he's going there, he's going to sort of beg the Saudis not to cut the 1 million barrels because summer travels. If the energy prices goes up during summer, that's an indication for the political party here in the US that they won't make it. And remember, we are coming soon to presidential elections here in the United States. So people are going to be voting, shall I say, with their pockets more than anything else. So by the way, guys, if you like the content of my videos, the videos that I put up for you because it's a research that I conduct and share the information with you, please hit that like button and subscribe. And I truly appreciate your kind support. So here's the thing that you need to know to put this within the global context, because it goes beyond just cutting production oil. We have to think about it in terms of the US tensions with OPEC, the oil producing exporting countries. It's very interesting, and I'm gonna take you back to almost the late '70s, early '80s, and back to 20s to 2018 and so forth. OPEC still till today continue to serve as a useful foil. This is what President Jimmy Carter tried to raise the specter of OPEC to encourage Americans, and his reason was, so I'm gonna say this so I can, so I can encourage Americans to sort of reduce fuel consumptions. No way, it didn't happen. Even the former president Trump was more explicit when he called OPEC a monopoly and demanded that the cartel reduce prices. Like, yeah, go figure. Keep yelling, keep shouting. OPEC does what he wants because they know they have the key, they control prices. So, and this is a common refrain from the presidents before President Trump, who never said that, but who view lower gasoline prices as a sort of— he looks at it as a tax cut for American drivers to a degree because they're using it as political tool to woo the votes. That's the reason why. Additionally, Congress— get this, guys— Congress has threatened to allow antitrust lawsuits against OPEC and its member states. Yeah, that's how far Congress was willing to go to ensure that the prices stay low. So, and now we have President Biden. Even President Biden also blamed OPEC for not increasing production fast enough in response to surging oil prices that have contributed to record inflation in the United States. Well, wait a minute, you know, if we are to be logical, let's ask the question: how did we get here to begin with? What led to the increase in oil prices if it weren't for the conflict that we created in Ukraine? Because now you got Europeans that have a massive energy crisis, and of course it hits us with the inflation. Of course price is going to go up, you know. Why blaming OPEC for that? OPEC is going to be looking for its own interest. And here's the interesting thing for OPEC itself, you know, the members of OPEC, you know how they see the bloc? They see it of more of a political club than an economic cartel. It's because with the US sort of scaremongering about OPEC serves a purpose. It maintains the myth of OPEC's importance and keeps Western diplomats and policymakers focused on it. That's, uh, what I want you to get out of this video, guys, is, is when you hear a decision like this by OPEC or OPEC+, you have to put it within the geopolitical and global energy context to understand its implication moving forward. Because this is not going to be felt tomorrow. We're looking at what lies ahead. And usually decisions like this will give you an idea. So, so OPEC+, the cut that they decide on in April back then, as I said, helped push prices up by about $9 a barrel above $87. It was $87, then when they decided to cut it, prices went up by an additional $9 $9 a barrel. So, but they fell quickly under pressure from concerns about the global economic growth and demand. But Mike Mauer, you know, OPEC doesn't care what the US is saying, or the West for that matter, because OPEC sees the opportunities with China and India, big markets. That is the reason why they decided to go ahead to move forward with the cut of 3.6 million barrels per day, per day. So when you think about OPEC+, a bloc that is— when it pumps about 40% of the global crude production, meaning what? It means that its decision could have a significant impact on oil prices. And soon, within a week— and then I'm gonna try snap a picture for you guys— within a week, we're gonna see prices going up. I already just saw it today driving, uh, the gallon is about $3.29 right here. So this is where I see, uh, the, the, the challenge that is going on, uh, as far as, uh, where, where it's gonna be. Basically, the, the idea of that— now you got even countries, okay, you got like, like the, the members of the OPEC, you You know, even countries of OPEC are agreeing to this cut. I'll give you just a few examples. Iraq, for example. Iraq said that it would extend the voluntary reduction of oil production by 211,000— I'm sorry, 211,000 barrels per day. United Arab Emirates, they decide to do the same. Kuwait decide to do the same. Algeria decide to do the same, you know, and this is where I see that challenge coming forward, where it's going to be enough for the West. They're going to have to figure out how to manage this increase. Europe is going to be hit hard. It's already hit hard with the, the, the cost in prices. So this is where I see the challenges coming up for, uh, uh, the oil prices here. So— or the production, rather. So OPEC+ cut shows that Saudi geopolitical ambitions— remember what I said at the beginning— is this decision reflect now or confirm Saudi's move pivoting east? And I've said this before, way back, even when I wrote my Saudi book back then, you know, 3 years ago or so, I argued that Saudis is already shifting But they're going to be shifting slowly, and this is an example of it. So Saudi Arabia is shifting to non-alignment and fighting to dominate oil market again. So it's because when you see the Secretary of State, US that is, going to Saudis to ask for, hey guys, can you increase production? The answer is going to be no. You know, they're gonna say no. Saudis, of course, gonna be very diplomatic about how they approach it. And the reason why is because they have over $120 billion worth of gold in the United States. That is the reason why. But the idea of they are going for, uh, uh, to talk about Yemen and Sudan problem, it's nonsense. It's nonsense. You know, the fact of the matter is that the US cannot control what's going on on the global stage anymore. No different than what just China said to the United States by refusing to meet following the request from the United States. So what it signaled to me as a geopolitical analyst is that the shift in geopolitical landscape is upon us. Okay, that's one. And second is that this order is going to be on a multipolar level. Gone. The days and the era where only a sole power, the United States that is, had to dictate the terms and all that, that era is gone. It's a reality. Washington is in denial, and I'm kind of like, you know, that's my way of making Americans wake up to this reality and understand it. That's the whole reason for why I do this kind of video, is to raise awareness. So, and for you If, as I said again, if you like the content of my videos, hit that like button and subscribe. I hope you find this very informative, and I look forward to seeing you next time. As always, remember, geopolitics impacts your daily life in more ways than one. Till next time, guys. Bye-bye.