Gasoline continues to be at a high level.

The background is the military invasion by Russia.

This is because crude oil prices are soaring due to concerns that crude oil exports from Russia may be delayed.

Under these circumstances, the trend of oil-producing countries in the Middle East and the Gulf region is drawing attention.

Why doesn't crude oil prices go down?

I will explain in detail.


(Kazuhiro Yamao, Director of Dubai Bureau)

Why are crude oil prices soaring?

Because Russia is one of the world's leading energy superpowers.



With the situation in Ukraine tightening economic squeeze on Russia by the United States and European countries, there is growing concern that the supply of crude oil from Russia will be delayed in the market.



For crude oil, the WTI (* 1) futures price temporarily exceeded $ 130 a barrel in March, the highest price in 13 years and 8 months.

Recently, it has been at a high level of around $ 100.



* 1… A crude oil futures product called WTI (abbreviation of West Texas Intermediate) that is traded in the futures market in New York.

Crude oil produced in the Midwest such as Texas in the United States, and one of the international indicators of crude oil prices.

Is Russia an energy superpower?

Russia is the world's third largest energy superpower in terms of oil (* 2) production.

After the United States and Saudi Arabia, it accounts for 12.1% of the world.

The top 10 countries are the United States, Saudi Arabia, Russia, Canada, Iraq, China, UAE, Iran, Brazil and Kuwait.



* 2: Includes crude oil, shale oil, oil sands, etc.

How can the price go down?

As with other products, crude oil prices are basically determined by the balance between supply and demand.

Therefore, if the production of crude oil increases, the price will decrease.



However, what is characteristic of crude oil is that the major oil-producing countries form groups and "consult and decide on production volume."



And this group "OPEC Plus" has a great influence on international crude oil prices.

Which countries will participate in "OPEC Plus"?

The United States, the world's largest oil-producing country, does not participate, but 10 of the 13 member countries of OPEC = Organization of Petroleum Exporting Countries and 20 major oil-producing countries around the world, including Russia, participate.

(10 OPEC member countries)


Saudi Arabia, Iraq, UAE, Kuwait, Nigeria, Angola, Algeria, Congo, Gabon, Equator Guinea



(10 non-OPEC member countries)


Russia, Mexico, Kazakhstan, Oman, Azerbaijan, Malaysia, Bahrain, South Sudan, Bahrain, Sudan



* In descending order of allocated crude oil production

Which country is the center of "OPEC Plus"?

It is an oil-producing country in the Middle East and the Gulf region, which produces a large amount of crude oil.

Specifically, there are four countries: Saudi Arabia, Iraq, UAE, and Kuwait.



Together, these four countries account for 24.3% of the world's production, which exceeds that of the United States.


(Based on data from British oil giant BP)

Would you like to increase production to lower prices?

In fact, in May 2020, when demand for crude oil fell and prices plummeted due to the effects of the new coronavirus, OPEC Plus stopped production, which is 10% of the world's production, in an attempt to maintain prices, and since then, production has been reduced. It is gradually increasing.



However, as prices are rising to a high level due to the situation in Ukraine, crude oil consuming countries are demanding a significant increase in production, saying that a small increase in production is not enough.



However, oil-producing countries in the Middle East and the Gulf region are cautious about increasing production.

Reasons for cautious increase in production Part 1 "High dependence on oil"

According to interviews with Middle Eastern diplomats, energy policy experts, and journalists who are familiar with the circumstances of oil-producing countries, there seem to be three main reasons.



The first reason is "high dependence on oil".



For oil-producing countries in the Middle East and the Gulf region, the sale of crude oil is the lifeline of national income.

For this reason, we think that the higher the price, the better.



Increasing crude oil production will lower crude oil prices, so it is said that we are carefully assessing whether demand for crude oil will continue to grow.



Although the supply is sufficient, many people buy oil due to anxiety due to the situation in Ukraine, and they suspect that the price may be rising temporarily.

Reasons for cautious increase in production Part 2 "Relationship between rice and Saudi Arabia"

The second reason is "the cold relationship between the United States and Saudi Arabia."



Saudi Arabia, the world's second-largest oil-producing country, has an alliance with the United States and has a strong voice in OPEC Plus.



However, the Biden administration is reviewing its relationship with Saudi Arabia, considering the powerful system and human rights situation as a problem.



Partly because of this, Saudi Arabia has not shown its willingness to respond to requests from the United States and other countries to increase crude oil production.

Reasons for cautious increase in production Part 3 "Deepening relations with Russia"

The third reason is "deepening relations with Russia."



Saudi Arabia has maintained its influence on international crude oil prices under OPEC, which was originally established in 1960, but in the 1980s, the number of oil-producing countries that are not members of OPEC increased and its influence declined.



It was Russia, the world's third-largest oil-producing country, which is also a rival.



In 2016, OPEC Plus was born under the leadership of Saudi Arabia and Russia, and once again became more influential in crude oil prices.



Experts have analyzed that Saudi Arabia has also shown consideration for Russia over the military invasion of Ukraine and will not respond to requests from the United States and other countries to increase production.

What will happen after all?

It seems that it will not be easy for oil-producing countries in the Middle East and the Gulf region to respond to increased production.



The UAE's ambassador to the United States, a major member of OPEC, issued a statement on March 9 that "we want to increase production, calling on OPEC to increase production further."



This was the first positive statement for an oil-producing country in the Middle East and the Gulf region, which had been considered cautious about increasing production.



However, the energy minister of the same UAE immediately expressed the idea of ​​respecting OPEC Plus' intentions, and there are temperature differences within the UAE.



The UAE, which also participates in OPEC Plus, cannot increase production on its own, and support from voice-producing oil-producing countries such as Saudi Arabia and Russia is indispensable for achieving additional production with OPEC Plus.



OPEC Plus participating countries will discuss future crude oil production policies on March 31st.



I would like to continue my coverage while paying attention to how oil-producing countries will accept the growing demand for a significant increase in production over the situation in Ukraine.

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