The shock of international oil prices has hit the recovery of the world economy

Recently, international oil prices have fluctuated sharply
.
In early March, Brent crude futures and light crude futures on the New York Mercantile Exchange briefly hit record highs of $130 per barrel, before falling sharply back to around
$100 per barrel.
Recently, some members of the International Energy Agency (IEA) announced the release of strategic oil reserves, which pushed international oil prices down
.
Despite this, current oil prices remain high compared to the end of 2021
.

Experts pointed out that the release of oil strategic reserves can curb the rise of oil prices in the short term, but it is difficult to fundamentally improve the contradiction
between supply and demand in the market.
In the case of unresolved geopolitical conflicts, major oil-producing countries do not significantly increase production, and economic recovery boosts market demand, international oil prices may continue to fluctuate at a high level, adding instability and uncertainty
to the process of world economic recovery.

Many countries release strategic reserves

On April 7, local time, the IEA announced that its member countries plan to release 120 million barrels of oil strategic reserves
in the next six months.
This is the second time in more than a month that the IEA has announced the release of strategic oil reserves
.
In early March, the agency announced the release of 60 million barrels of oil strategic reserves
.

US President Joe Biden announced on March 31 that he would release 1 million barrels of oil per day from the US Strategic Petroleum Reserve in the next six months, with a cumulative release of 180 million barrels, in response to the current shortage of supply and high oil prices, and said that this is the largest oil reserve release
in US history.
Of that, 60 million barrels are included in the 120 million barrels announced by the IEA
.
It is reported that this is the third time that the United States has announced the use of strategic petroleum reserves
in half a year.
In November 2021, the Biden administration announced the release of 50 million barrels
.
In March, when the White House announced a ban on Russian oil and gas imports, it released another 30 million barrels
.

According to Yonhap News Agency, on April 8, local time, South Korea's Ministry of Industry, Trade and Energy said that South Korea decided to release 7.
23 million barrels of oil reserves, which is South Korea's largest release under such international measures so far
.
Last month, South Korea pledged to release 4.
42 million barrels of oil reserves
.
According to Japan's Kyodo News Agency, on April 7, local time, Japan announced that it would release 15 million barrels of oil
from civilian and national reserves.
This is the first time Japan has released its national oil reserves
, citing concerns about insufficient supply.

After the outbreak of the Russian-Ukrainian conflict, the sanctions imposed by the United States and Western countries on Russia triggered a surge in oil prices and triggered violent turmoil
in the financial market.
In early March, the price of Brent crude oil futures rose sharply, reaching a high of $140 per barrel, and the price of light crude oil futures on the New York Mercantile Exchange also exceeded $130 per barrel, and the two major crude oil futures prices both updated their highest values
since July 2008.

According to Reuters, the IEA had previously expected that the international market would reduce Russian crude and refined products by an average of 3 million barrels per day since April, and the use of emergency reserves would partially fill this shortfall
.
Recently, with the United States and other oil consuming countries announcing the release of oil strategic reserves, international oil prices gave up some of their gains, but the two major crude oil futures prices have remained stable above $90 per barrel in the past few days, which is significantly higher than the oil price level at the end of 2021
.

The contradiction between supply and demand still exists

This round of high oil prices is obviously affected
by geopolitical conflicts.
Cui Shoujun, a professor at the School of International Relations of Chinese Minmin University, pointed out in an interview with this reporter that Russia is the world's third largest oil producer
.
After the outbreak of the Russian-Ukrainian conflict, the United States attracted Western allies to continuously increase sanctions against Russia, trying to exclude Russia from the international energy market, increasing the market's concerns about energy supply, causing international oil prices to rise
.

"The intensification of geopolitical turmoil around the world is one of
the important factors contributing to the current energy crisis.
" Qian Xuming, associate researcher and director of the energy research project at the Middle East Research Institute of Shanghai Wai Chinese University, pointed out to this reporter that at the beginning of 2022, Libya, Nigeria, Ecuador, Turkey and other countries have successively experienced sudden supply disruptions, tightening market supply
.
The protracted Iranian nuclear issue, the attack on Saudi Arabia's oil facilities by Yemen's Houthi armed forces, and the outbreak of conflict between Russia and Ukraine have caused sharp fluctuations
in the global energy market.
For some time, the sanctions imposed by the United States and the West on energy exporters such as Russia have further aggravated global energy and financial risks
.

From a longer timeline, this round of high oil prices continues the upward trend
of international oil prices since 2021.
Statistics show that in 2021, the price of light crude oil futures on the New York Mercantile Exchange rose by more than 55% in one year, the largest annual increase in 12 years; Brent oil prices rose more than 50% in a year, the biggest annual increase in five years
.

Qian Xuming pointed out to this reporter that since 2021, the global economy has gradually recovered, many European and American countries have unblocked, and industrial production and transportation have returned to normal, driving a surge
in international oil and gas demand.
However, energy companies that have been hit hard by the epidemic have not fully restored production capacity, and the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers, namely OPEC+, continue to maintain a slow pace of production increase, resulting in crude oil supply unable to meet market demand
.

According to foreign media reports, "OPEC+" held a ministerial meeting a few days ago and decided to maintain the original moderate production increase plan, raising the monthly total output in May to an average of 432,000 barrels per day, rejecting the call of the United States and other oil-consuming countries to accelerate production increase
.

Cui Shoujun pointed out that in the context of the international community's promotion of carbon neutrality and the development of clean energy, out of economic interests, "OPEC+" is not active in large-scale production increase, and US shale oil and gas companies are unwilling to respond to the government's requirements
for increasing production.
The supply side is weak, and the phenomenon of short supply in the international crude oil market will continue to exist, so that international oil prices remain high
.

The effect of "stockpiling" in price suppression is limited

The United States and other IEA member countries "stockpile" on a large scale, how long can the effect of price suppression last? All sides are cautious about this
.

"In the short term, the release of strategic reserves will undoubtedly cool oil prices
.
However, in the medium and long term, the impact of 'stockpiling' may be limited
.
Cui Shoujun pointed out that the current "reserves" of the United States and other IEA member countries cannot make up for the market gap left by Russia, and cannot fundamentally solve the structural contradiction
between market supply and demand.

According to foreign media reports, the foreign ministers of the EU member states held on April 11 discussed the issue of imposing a new round of sanctions on Russian energy, but ultimately failed to make a decision
.
OPEC Secretary-General Barkindo warned EU officials that sanctions on Russian oil could trigger a "record disaster" and that the loss of oil supplies, which could be up to 7 million barrels
per day, was "irreparable.
"

Bloomberg notes that there are always risks
associated with the deployment of strategic petroleum reserve "weapons".
Historically, the results have been mixed
.
Any reserve may be offered in exchange rather than sale, and refiners will have to commit to replacing crude oil for years to come, with some more as interest
.
In the long run, they draw more
crude oil from the market than they put in.
Statistics show that 64% of the 50 million barrels "stocked" by the United States in November last year were completed
through swap transactions.
This means that some oil from 2022 to 2024 still needs to be returned to the Strategic Petroleum Reserve, which will support crude oil prices in the medium and long term
.

According to the Financial Times, the 180 million barrel "reserve" plan announced by the United States will bring US oil reserves to the lowest level
since 1984.
Edward Bell, senior director of market economics research at NBB in the United Arab Emirates, pointed out that in the long run, there are "risks"
in the United States using the strategic petroleum reserve on such a large scale.
If the structural supply gap in the oil market persists longer, the reduction in U.
S.
oil inventories could prompt oil prices to rise
in the next year or two.

"At present, the prospects for resolving the Russian-Ukrainian conflict are still uncertain, coupled with the difficulty of large-scale increase in crude oil production, the continuous sanctions of the United States and the West and many other factors, the high oil price hovering time or longer
.
" Cui Shoujun pointed out that high oil prices will exacerbate inflationary pressure, raise industrial production costs, and bring more risks
to the world economic recovery process.
In the medium and long term, the energy transition remains a global consensus
.
High oil prices and a series of negative effects will force the global energy transition process and promote the replacement
of traditional fossil energy by new energy.

"The current international energy pattern is undergoing fundamental changes
.
The coronavirus pandemic and the trend of carbon neutrality have changed oil and gas supply from excess to shortage, and the international oil and gas market has changed from a buyer's market to a seller's market
.
With the gradual recovery of the world economy, market demand will further increase, and international oil prices still have the possibility
of continuing to rise.
Qian Xuming pointed out that in order to stabilize international oil prices and alleviate the global energy crisis, while releasing strategic reserves and gradually restoring oil and gas production, we should vigorously develop new energy and promote low-carbon and sustainable economic development
.
In addition, the international community should actively persuade peace and promote talks to alleviate the high
oil prices caused by geopolitical conflicts.