Mizuho: “leave oil market in hands of the Saudis”
In an interview on Bloomberg Television Robert Yawger, executive director of Energy Futures at Mizuho Securities, said: “They’ve (Saudis) done a magnificent job of managing their production program in the COVID era,”
“The collapse of oil prices (in the CORONA period) has had a terrible impact on the industry but the market rebounded again under the management of the Saudis.” Moreover, he concluded by saying, “OPEC should leave oil market in hands of the Saudis”
As I mentioned in my article on “Plus” Mechanism for the Energy Market” in AL Riyadh Daily on 26 Jul 18 that Saudi Arabia have the Ability and capabilities of arrange and manage the global energy market.
Back to oil market now, OPEC has agreed to increase 400,000 barrels per day starting in August until the cuts are completely cancelled.
As the IEA Oil Market Report (OMR) for July 2021:“Following two consecutive months of decline, global oil demand surged by an estimated 3.2 mb/d to 96.8 mb/d in June. Robust global economic growth, rising vaccination rates and easing social distancing measures will combine to underpin stronger global oil demand for the remainder of the year. Global oil demand is expected to increase by 5.4 mb/d in 2021 and 3.0 mb/d in 2022, although escalating COVID-19 cases in a number of countries remains a key downside risk to the forecast.”
In addition, the report mentioned, “Crude prices rose in June on bullish oil fundamentals and financial markets. Backwardation steepened on crude futures contracts reflecting tighter markets and falling oil stocks versus demand. North Sea Dated rose $4.41/bbl in June to $72.96/bbl and peaked at $77.70/bbl on 5 July”
Meanwhile, analysts expected that the recovery in prices has been largely due to continued production restraint by OPEC+.as while the members increased production since the start of 2021, this has been more than offset by Saudi Arabia voluntarily cutting an extra 1 million barrels per day from February 2021.
As according to OPEC data, Q2 2021 oil demand rose by 3 percent quarter-on-quarter and a sizable 14 percent year-on-year. The outlook for the remainder of the year is consistent with previous estimates, with oil demand expected to keep growing quarter-on quarter in Q3 and Q4 2021.
* Farhan Hassan Al Shammari