Oil producers are at odds with the United States, and international oil prices are sprinting to the $100 mark to get rid of their sluggishness

The confrontation between the two oil-producing forces has exacerbated oil market tensions, lifting international oil prices, which have weakened in the past four months, from a sluggish market
.
At the OPEC+ ministerial meeting on October 5, the Alliance of Oil-Producing Countries, including Saudi Arabia and Russia, decided to cut production quotas by 2 million b/d
from November.
According to the surging news, international oil prices this week recorded the largest weekly increase since mid-March this year, second only to the surge
in oil prices at the beginning of the Russian-Ukrainian conflict.

For a week, OPEC+'s Vienna production cut conference has become the focus
of industry-wide attention.
As of the close of trading on October 7, WTI crude oil futures for November delivery on the New York Mercantile Exchange reached $92.
64 / barrel; Brent crude oil futures for December delivery on the London Intercontinental Exchange were trading at $97.
92/b, with an intraday high of $98.
5/bbl; The two oils rose considerably, up 16.
5% and 11.
3% respectively from the closing price on September 30
.

With some OPEC+ members, including Russia, currently producing below their quota targets, the actual amount of oil withdrawn from the market is much less than 2 million b/d, and the industry expects the actual production cut to be around 1 million b/d, which is equivalent to 1%
of global supply.
Still, the decision to cut production has added momentum to higher oil prices, with the $100 integer psychological threshold just around the corner
.

Previously, oil prices had fallen all the way from a high of $120 a barrel to below
$90 as major economies in Europe and the United States suppressed inflation through aggressive rate hikes, a stronger dollar and heightened investor fears of a global recession.

OPEC+ has once again deviated from the wishes of the Biden administration, and the US countermeasures are limited

The Paper noted that the timing of the OPEC+ decision is quite delicate, coinciding with the European Union's approval of the eighth round of sanctions against Russia (including the price cap on Russian oil), two months before the EU embargo on Russian offshore oil imports takes effect, and one month
before the US midterm elections.
Before the Vienna meeting, the United States had urged OPEC+ members not to continue to cut production, saying that current economic fundamentals do not support production cuts
.
But in the end, the production cut agreement was not only passed, but also larger
than the market expected.

JPMorgan expects the Biden administration to counter by releasing more inventories from the strategic oil reserves, but U.
S.
strategic oil reserves have fallen to their lowest
level in nearly 40 years since continuing to implement the largest volume dump in history in March.
Therefore, it is difficult for the United States to continue to invest strategic inventories on a long and large scale to stabilize oil prices
.

Francisco Blanch, head of global commodities and derivatives research at the Bank of America, said further U.
S.
releases of strategic oil reserves to curb oil prices could backfire
.
This is equivalent to putting its own fate more in the hands of OPEC+, and in the end it will "only hand over more and more market control"
.

Immediately after the OPEC+ production cuts meeting, the White House issued a statement saying that US President Joe Biden asked the US energy secretary to seek additional measures to immediately increase domestic production
.
But the U.
S.
local energy research institute IER believes that OPEC+ production cuts are not expected to stimulate the United States to increase oil and gas production
.
U.
S.
shale oil production recovered quickly after a collapse in oil prices in 2016, but now faces more hurdles as supply chain problems constrain equipment, fewer employees and less funding
.
In addition, the Biden administration's energy policy calls for an accelerated transition from oil and gas to renewables, limiting
new investment in oil and gas.

When Biden once again blamed Russia and Saudi Arabia for the rise in gasoline prices, Saudi Foreign Secretary Adel Jubail retorted: "The reason for the high price of oil in the United States is that the refining shortage in the United States has lasted for more than 20 years," he said, "The United States has not built an oil refinery for decades.
"
”

Oil prices rebounded strongly and are expected to return to $100

Boosted by the OPEC+ production cut decision, the world's major investment banks, financial institutions and market analysis institutions have been singing about the crude oil market for several days:

ANZ believes that crude oil prices will approach $100/b in the short term, reiterating its short-term target of $115/bbl;

Analysts such as Damien Courvalin, Goldman Sachs energy research director, raised the bank's forecast for Brent crude for the fourth quarter by $10 to $110/barrel
.
"If the production cuts continue until December 23 next year, the move would amount to making Brent oil prices 25 dollars higher than we previously predicted at $107.
5/bbl, and if inventories are completely depleted, oil prices could rise to higher levels, a situation that must require demand disruption as a last resort";

Morgan Stanley raised its forecast for Brent crude for the first quarter of 2023 to $100/b after OPEC+ announced production cuts;

UBS believes that the oil market is expected to tighten further, and Brent crude oil will break through the $100/barrel mark in the next few quarters;

Warren Patterson, head of commodity strategy at INTERNATIONAL in Singapore, said OPEC+'s production cuts were enough to significantly change the balance of supply and demand next year, leaving the market in short supply
for the whole of 2023.
The bank's expectations for Brent crude oil at $97/b next year have clear upside space
.
However, the United States has the potential to further release the strategic petroleum reserves, although the move may have only limited impact;

Stephen Innes, a partner at SPI Asset Management, believes Brent crude oil prices could return to above $100 in the coming quarters.

Rystad Energy, an energy consultancy, believes that the measures announced by OPEC+ have a significant
impact on oil prices.
"By December of this year, Brent crude oil prices will exceed $100 per barrel, higher than we previously expected at $
89.
"

Gui Chenxi, chief energy analyst at CITIC Futures, believes that the OPEC production cut is a re-revision
of the logic of oil prices in the fourth quarter.
"The production cuts materialize the upside risk of oil prices, if other variables are not taken into account, or raise the current oil price center by at least $10 / barrel; Bottom support moves from 80 to $90/bbl, with a possible break above $100/Bbl
.
The upside height depends on the duration of the OPEC production cuts: if only two months are implemented, the impact is relatively limited; If it continues into the whole of next year, it will continue to push up oil prices
.
There is also a need to pay attention to the degree of fermentation of downside risks, including adverse impacts on the global economy and the multiple countermeasures being explored by the Biden administration
.
If downside risks materialize, it could partially hedge the OPEC production cuts against an upward push
on oil prices.
”

Xi Jiarui, an analyst at commodity information agency Jinlianchuang, believes that the crude oil market has continued to fall for nearly four months, from nearly $130 per barrel to $80, making the market urgently need a major positive news to boost the overly decadent market
.
The announcement of large-scale production cuts by OPEC+ at this time is exactly what the oil market is waiting for to trigger the rebound, and more importantly, the move marks a complete split between the United States and the oil-producing countries, which will have a far-reaching impact on the
crude oil market.
"Contrary to the United States, oil-producing countries want oil prices to stabilize above $90/b to maintain higher interests, so in the short term, international oil prices have the momentum to maintain at this price level and are expected to rise further, and Brent crude oil is expected to hit the price of
$100 / barrel next week.
"