In this interview with Cyba Audi from Asharq Business Bloomberg, Dr Carole Nakhle, CEO of Crystol Energy, argues that US President Joe Biden has blamed the rise in oil prices on OPEC and its allies, which his administration has recently described as a cartel – much to OPEC’s dismay.
Gasoline prices play an important role in influencing American voters. Even President Biden cited the rise in energy prices as playing an important role in determining the elections outcome in the State of Virginia where the Republicans won the governor’s seat against the Democrats.
One, however, should not forget that the US is the world’s biggest oil producer, and when oil prices are high, the US industry benefits with positive spillovers to the rest of the economy including through increasing hiring and paying more taxes.
While President Biden asked how fast domestic production can be increased, his administration wants to remove a wide range of incentives given to support the industry.
Dr Nakhle further adds that the Strategic Petroleum Reserves (SPR) card is used as a threat but market fundamentals don’t justify its use at this stage.
Commenting on the return of Iranian oil due to the resumption of nuclear talks in Vienna, Dr Nakhle claimed that the market won’t be flooded soon with Iranian oil since a deal will not be reached overnight. Besides, Iran has been selling some of its oil “under the radar” and in the longer term will face production bottlenecks that would limit a rapid expansion in capacity.
Dr Nakhle concludes that 2022 will see much more exciting dynamics for oil markets than the remaining of 2021.
“Global Economy and Energy Markets Weekly Commentary – 31st Oct ‘21“, Christof Rühl, Oct 2021