“Manipulating Internal Data”: How US Actions Affect World Oil Prices

According to the ICE exchange in London, on August 29, the price of Brent standard North Sea crude oil added about 0.2% and exceeded $ 60 per barrel. The growth of quotes started a day earlier after the publication of data on a record decline in oil reserves in the United States.

According to a report by the United States Energy Information Administration (EIA), oil reserves in the country declined immediately by 10 million barrels per week. According to the American Petroleum Institute (API), the decline was 11.1 million - the highest since January 2018.

It is noteworthy that, against the backdrop of a fall in reserves, the Americans record a noticeable decrease in drilling activity. From August 16 to August 23, the number of drilling rigs in the USA fell immediately by 16 units - to 754 units. According to the oil service company Baker Hughes, the value has become minimal over the past year and a half.

Statistics have traditionally signaled to investors a decline in global oil supply and are causing price increases. Meanwhile, experts believe that the US artificially supports the cost of hydrocarbons by publishing data.

“The trade war and the slowdown in the global economy lead to a decrease in oil consumption and lower commodity prices. Meanwhile, the numbers that market participants are now observing are artificially supported values. There are a lot of tools for this, starting from the development of the military conflict in the Persian Gulf, restrictions on oil exports of Iran and Venezuela, ending with the manipulation of internal data, ”Artem Deev, head of the AMarkets analytical department, explained to RT.

Recall that in January Washington imposed restrictions against Venezuela's largest oil company - Petróleos de Venezuela, SA (PDVSA). In total, the States blocked the corporation’s assets for $ 7 billion, and by the end of 2019, it is expected that PDVSA lost profits from restrictions will be about $ 11 billion. As a result, according to EIA, from the end of May, the United States completely stopped purchasing oil from Caracas.

Moreover, in early August, the States further increased pressure on Caracas. So, Donald Trump signed a decree on blocking the ownership of the Venezuelan authorities in the United States. The Central Bank of the Latin American Republic and PDVSA fell under restrictions.

Against this background, since the beginning of 2019, oil production in Venezuela has fallen by almost 37% to 742 thousand barrels per day. This is evidenced by OPEC data.

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Even before the start of the conflict with Venezuela, Washington had strained relations with Tehran. In May 2018, the United States withdrew from the nuclear deal and announced the restoration of sanctions against the Islamic Republic. The main package of measures entered into force on November 5, it applies to the country's energy sector and operations with the central bank.

As the US State Department previously stated, the main goal of the sanctions is to reduce to zero Tehran’s income from oil sales. For this, before the beginning of May 2019, large countries - importers of Iranian raw materials should completely stop the purchase of hydrocarbons. Otherwise, states would also be subject to US sanctions.

Thus, according to OPEC, since the beginning of 2019, oil production in Iran has fallen by 18.7% to 2.2 million barrels per day.

In the summer of 2019, relations between Tehran and Washington deteriorated again. Market participants began to fear the outbreak of armed conflict between states. A possible start of hostilities could lead to interruptions in the supply of raw materials from the Gulf countries.

It is curious that the States are record-breaking their own oil production. According to the EIA, daily production in the country has already reached 12.5 million barrels. Traditionally, such dynamics testifies to an increase in supply on the world market and leads to a reduction in the cost of energy resources. At the same time, it is precisely due to a decrease in domestic stocks and restrictions against Iran and Venezuela that the States, by contrast, are trying to provoke a rise in prices.

“Speaking about Iran, the decline in supplies from the country is one of the key supporting factors for oil prices, along with the OPEC + reduction program and a drop in production in Venezuela. Obviously, pressure from the United States supports oil quotes and allows under favorable circumstances to increase production, replacing the share of Iran and Venezuela, ”said Vyacheslav Abramov, director of the BCS Broker sales office, in an interview with RT.

It is noteworthy that earlier Donald Trump actively opposed expensive oil and repeatedly called on OPEC countries to lower prices. Against the backdrop of forecasts of an imminent recession in the US economy and the upcoming presidential election, Trump is trying to prevent fuel prices from rising in the country. About this in a conversation with RT told the expert of the company "International Financial Center" Gaydar Hasanov.

Meanwhile, according to experts, at a low cost of energy, shale oil production becomes less profitable. Thus, a global price reduction could lead to financial losses for US energy companies. As a result, according to Vyacheslav Abramov, due to the support of high quotes, the United States is experiencing a “new round of shale revolution”.