Christof Rühl, member of the Advisory Board of Crystol Energy and a Senior Fellow at the Harvard Kennedy School and the Center on Global Energy Policy at Columbia University, discusses the latest global macroeconomic developments and oil markets in this weekly interview to the Gulf Intelligence.
Christof gives his take on the modest impact hurricane Ida had on oil prices after shutting in over 1 Mb/d. He points to another statistic which came out earlier this month in the US, the claims for unemployment. These are now below the available job openings indicating a red-hot economy on top of these oil production shortages from Ida, and what both of them tell us is that there’s just plenty of oil around. You can also add to that, August production of OPEC+ was still way below their target quotas, so they are under what their own agreement permits them to pump.
On the outlook for OPEC+ oil supply, he notes that in the producing countries outside of OPEC, the ‘plus’ countries of OPEC+, other than Russia, most are struggling to reach their quotas and in some cases are declining. That should be another bullish indicator, and still oil prices are only up to $73. So, even if there is a short-term price spike right now because of this accumulation of bullish things, it just indicates how oversupplied markets are. It indicates the knowledge that shale oil is coming back gradually, as well as expectation that more production will come from the North Sea, from Brazil and other areas of higher cost production, and so there is just no reason for markets to get concerned by current events.
Christof also discusses whether the market should be more concerned about supply or demand. When you combine the outlook for economic growth, the demand side of the equation, you see economies are not exactly taking off like a rocket. You see more worries about the Delta virus and possibly other contagions coming after it. It explains why we are seeing a much more moderated picture. The reality is that despite hurricane Ida, despite OPEC+ failing to raise production to their quota levels, and despite the strong US economy, all these factors combined are still not lifting prices much higher. This confirms to those of us who sit on fundamentals that there is plenty of oil in the world full stop.
Watch the full discussion:
“Global Economy and Energy Markets Weekly Commentary – 9th Sep ’21“, Dr Carole Nakhle, Sep 2021
“OPEC+ sticks to previously agreed oil supply hikes“, Dr Carole Nakhle, Sep 2021
“OPEC+ Sees 2021 Oil Deficit, 2022 Surplus“, Christof Rühl, Sep 2021
“Global oil markets feel the impact of Hurricane Ida“, Dr Carole Nakhle, Aug 2021