Where will international oil prices go after the multi-party game?

On December 6, international oil prices closed with a 4% increase; Light crude futures closed at $72.
05 a barrel on Dec.
7 and London Brent futures closed at $75.
44 a barrel, in stark contrast
to last week's consecutive declines.
Recently, international oil prices have been like a "roller coaster", with ups and downs
.
For this reason, many countries around the world have taken countermeasures, under the game of all parties, what is the trend of oil prices?

On November 23, the United States announced that it would release 50 million barrels of strategic reserve crude oil, followed by India, the United Kingdom, South Korea, and Japan
.
In the two days following this news, international oil prices rose slightly
.

When people questioned the effect of releasing oil storage, unexpectedly, affected by the pessimistic expectations of the new coronavirus variant Omicron, international oil prices plunged sharply on November 26, and oil prices fell by more than 10%
on the day.
The downward trend continued for the next few days, in stark contrast
to the previous highs of $85/barrel.

Under the background of the decline in international oil prices and pessimistic expectations of the epidemic, the industry also speculated that the December 2 meeting of oil exporting countries and their allies of oil producers (hereinafter referred to as "OPEC+") may cancel the original production increase plan
.
However, OPEC+ made the decision
to maintain its original plan to increase production by 400,000 barrels per day.
Affected by this news, international oil prices picked up
slightly this week.

Why did the United States take the lead in releasing oil reserves? How effective is the release of oil storage by multiple countries? What is the future trend of international oil prices?

The United States picks the big head and throws a "killer app" with the intention of lowering prices

As an important oil consumer and exporter in the world, what is the purpose of the United States in throwing out the "killer app" to release oil reserves this time, causing its own oil prices to fall?

"This move by the United States has released two important signals, one is that the Biden administration in the United States wants to bring down US prices; The second is to suppress oil-exporting countries
.
Qiao Dewu, former deputy chief engineer and senior researcher of the Oil and Gas Resources Strategic Research Center of the Ministry of Land and Resources, said
in an interview with a reporter from the China Economic Times.

Higher oil prices have put inflationary pressures
on the United States.
The US CPI came in at 6.
2% in October, the highest in 31 years
.
US President Joe Biden has repeatedly called for OPEC+ to increase production, but has been rejected
.
As a result, the United States joined several other oil-consuming countries to release oil reserves
.

Qiao Dewu further analyzed that the United States has released oil reserves many times in history, but the reasons are different
each time.
This initiative also requires other countries to follow suit, which is closely related to
its own interests.
The House of Representatives of the US Congress recently passed a bipartisan infrastructure investment bill totaling about $1 trillion, and increasing investment will inevitably lead to rising prices, and the Biden administration is eager to bring down US prices at this time
.

At the same time, the U.
S.
government wants to mobilize major oil demanders to rein in OPEC+
.
OPEC+, which has endured years of low oil prices, has been vigorously operating on the rise
in oil prices.
However, considering that global crude oil demand is still recovering due to the recovery of transportation, OPEC+ did not take a rash new move, but maintained the original plan to increase production by 400,000 barrels per day
.
"Increasing production by 400,000 barrels per day can only meet part of the demand, and the symbolic effect on oil prices is greater than the actual effect
.
" Qiao Dewu said
.

The sale of oil reserves by many countries is still a drop in the bucket

Some people believe that high oil prices are the "bane" of global inflation, and can the plans of many countries to sell oil reserves really achieve the expected results? Industry insiders believe that the multinational arrangement to release national oil reserves is intended to curb excessive oil prices, thereby easing the pressure of domestic inflation, and it remains to be seen how effective it will be
.

Han Zhengji, an analyst at Jinlianchuang crude oil, said in an interview with this reporter that the release of oil reserves, to a certain extent, shows that the current high oil prices and supply shortages have caused dissatisfaction
in many oil-demanding countries.
Crude oil prices rose to a nearly seven-year high, largely due to a lack of supply
.

He believes that from the current scale of multinational reserve releases, the total amount of
crude oil entering the market is about 60 million to 70 million barrels, and this part of the release will enter the market in batches, and the average daily demand of the global crude oil market this year is about 98 million barrels.

"The price of crude oil rose because of insufficient supply, and the sale of oil storage was to fill this gap, but the tightening of oil storage had a relatively
small impact on inflation.
" Xu Hongcai, deputy director of the Economic Policy Committee of the China Policy Science Research Association, told this reporter that at present, the US monetary policy is somewhat stretched to cope with inflation, and this method can only be used as an auxiliary means
.

An industry expert who did not want to be named said in an interview with this reporter that the release of reserves during the period of high oil prices can only play a short-term role in pulling down (diluting) oil prices, and it is difficult to shake long-term changes in international oil prices
.
There are three reasons: First, from the scale point of view, oil reserves are very limited, difficult to release in a sustainable manner, and it is difficult to have a long-term impact
on international oil prices.
Second, oil reserves are equivalent to national assets, and short-term release of reserves is equivalent to short-term loans, which must be repaid
sooner or later.
Third, if the price increase of oil is a long-term contradiction between supply and demand, when the reserves are released or the limit is reached, oil prices will still return to the original trend, and only when the contradiction between supply and demand is eased will it really affect oil prices
.

International oil prices are facing many uncertainties

Experts interviewed believe that the cliff-like decline in oil prices on November 26 was mainly caused
by the release of oil storage by major energy consumers and the new coronavirus variant strain.

"Oil supply and demand basically play a decisive role in the short-term rise and fall of international oil prices, and the underlying logic and the most fundamental driving force of any international oil price fluctuation is the contradiction
between supply and demand.
" The above-mentioned industry experts, who did not want to be named, believe that the future oil supply and demand relationship is facing a lot of uncertainty, which is currently mainly focused on the two major factors
of the epidemic long-tail effect and global carbon constraint targets.

He further analyzed that repeated epidemics will reduce the mobility of the economy and travel, and the reduction of energy demand and carbon emissions will make the probability of oil consumption prices being
lowered.
At the same time, the epidemic has led to short-term financial problems, superimposed on carbon constraints, making more financial choices for green investment, and upstream investment has been significantly reduced
.

However, these are only short-term effects, and in the medium and long term, the future trend of international oil prices depends on changes in multiple factors such as supply and demand and global economic recovery
.

Zhang Jianping, deputy director of the Academic Committee of the Academy of International Trade and Economic Cooperation of the Ministry of Commerce, told this reporter that the global economy is still in the process of recovery, the epidemic situation in various countries is still severe, and some countries have retaken control measures, which may drag down demand expectations, which will bring a lot of uncertainty to the price of
crude oil in the future.

Therefore, the current judgment of the international market on oil prices is also full of differences
.
Some industry insiders believe that oil prices will face downward pressure
next year due to the increase in OPEC+ supply and the continued recovery of U.
S.
shale oil production.
Some Wall Street banks are bullish on long-term oil prices, believing that OPEC+ control of prices could be a key factor in pushing up oil prices in the coming years, which could reach $150 a barrel
by 2023.