OIL supply, with a spare capacity of about three million barrels, could drop further by 50 percent during the US driving season. At the same time, the big oil companies are refusing to invest in new oil, unless they are sure of their return on investment but without taking any calculated risk. They are all in anticipation of 2050 and zero gas emission. Hence, only oil producing countries are spending a large part of their income on oil, while the Western world is fighting against any fresh new oil and gas.

Also, Europe is scared of being cut off of gas supply from Russia, which provides more than 45 percent of gas to the continent. This is piling up the pressure on the energy market. Gas could be imported from the USA and Qatar, or gas cargos can be exchanged from any destination to Europe to more than 27 countries. The question is regarding the availability of gas vessels to carry enough volumes of gas to needy customers. This time, the energy situation is unique, with the need for oil and gas, as one is scarce and the other is captured.

Next week, the OPEC+ will meet again based on its monthly schedule and due to the increased expectation to renew its usual volume of 400,000 barrels per day. However, 18 of its members still cannot meet the agreed quota. So why not let others replace their volume, as about 800,000 barrels is short of the agreed daily OPEC+ volume which is causing the tightening of the oil market, and pushing the oil prices above $90? It might be just possible for OPEC+ to increase its own production volume from the current established level to 500,000 barrels or more to ease the price pressure and calm the energy market. OPEC+ should perhaps just stick to its usual volume release, as in both cases the supply is not there and it can’t furnish the market with more volume any time now.

Others are unable to meet their own quota requirement, due to which there is no spare capacity at sight. Experts in financial institutions are predicting oil levels of $125 and $150 per barrel by 2023 - a level that is not far away from the 2008 crude oil price of $147 per barrel. This time, it is the combination of oil and gas together that is leading to the tightening of the energy supply market. All oil producing countries are generating huge cash from today’s prices. However, are we learning enough about moving towards clean energy equally? Are we learning this time to invest wisely about cutting costs? Are we learning from the mistakes of the past?

By Kamel Al-Harami
Independent Oil Analyst

email: [email protected]