The oil keys in 2020 and the forecasts for 2021

The year to come has been turbulent for the oil sector, mainly due to the colossus and the accelerated rearrangement of the global dominant system. So the priority in energy security of Western countries has intensified and the desire for control of resources became increasingly desperate.

We come from a “quiet” January, in which the rapid spread of covid-19 was not imagined, although the shocking news at the beginning of that month was about the assassination of Iranian General Qasem Soleimani by the Donald Trump administration, which triggered alarms. on the oil market due to fears of an increased risk for energy supply in the Middle East, among other implications.

As for crude oil prices, they tended to decline in the coming months, when the covid-19 pandemic was already present until the noisy April 20, the day the US WTI fell from 18 USD / b to -38 $ / b in a few hours.

In this regard, the Organization of the Petroleum Exporting Countries (OPEC) has made the same coordinated and unified effort to determine what policies to adopt to protect the stability of of the market, given the impact on crude oil demand in this pandemic scenario.

In light of these specific events, it is also necessary to review investments in alternative energy, the movements of large oil corporations and some projections of renowned organizations to estimate possible scenarios, given that in January, after controversial and terrible elections, in the US, the White House will be chaired by Joe Biden.

The ups and downs of the oil market

Without pretending to cover all the interactions that affect the oil market, it would not be bad to comment on some remarkable considerations this year.

Reference has already been made to the April event, which for the time being has been justified by mentioning the complications of crude oil storage; However, the next day WTI recorded 11 USD / b, gradually recovering all week beyond 16 USD / b, so it is possible that this maneuver was a typical speculation, typical of the financial structure.

Similarly, concerns were present months earlier when in China, since the end of January, the closure of cities has been established under quarantine, which generated a sharp decrease in energy demand.

In addition, Russia and Saudi Arabia, among the largest oil producers in OPEC +, decided not to go for deeper cuts between February and March, as market share could not be risked.

The big corporate press has classified these decisions as a “price war” and, in particular, doubts that this was entirely the case, as market shares are the key for any actor in this dynamic, even this factor is the subject. main in every negotiation. Saudi Arabia and Russia have simply defended their market position against American shale producers, who started the real price war a few years ago, betting on falling oil prices as heavy and cheap oil has served the West. exhilarating.

Losing participation and creating a place for another exporting country is not very attractive from an economic point of view. Everyone in the oil game is reluctant to see their market share fall.

Subsequently, market uncertainty worsened due to the evolution of the pandemic, as hopes of a possible vaccine and rising covid-19 infections worldwide, in addition to airport and city closures, predicted that the outlook for the coming months did not look encouraging.

However, the market remained in some equilibrium amid the withdrawal it experienced in the face of a possible long-term crisis, so that from June to October WTI closed in the band between $ 30 / b – $ 40 / b. For the last quarter of the year, prices were expected to fall again at some point, but there was optimism about a sustained recovery in demand due to the race for vaccines and their rapid application. .

The International Energy Agency (IEA) and OPEC have reduced its forecast for crude oil demand for the rest of the year. Although the downward revision of the IEA is slightly more optimistic, both figures are around 90 million barrels per day and would bring global oil demand back to 2013 levels.

In short, we must not marry with optimistic projections, the world economy is entering a new dynamic and, based on what has been experienced this year in the field of energy, it seems that the market has been artificially supported by financial interests, because many companies And if there is much fear of a drop in oil, these companies will not be able to pay their debts, which, in fact, could generate a demand for liquidity in dollars that can destabilize the financial system and lead to panic.

Thus, the first quarter of 2021 will be partly defined by the next OPEC + meeting, where several countries intend to increase their trailer production with the implications of multi-edge covid-19 outbreaks.

OPEC + vs NOPEC

For more than a decade, in the context of energy security and independence at all costs in the United States, some US lawmakers have pushed for legislation to stop the Organization of the Petroleum Exporting Countries, but the project has not been completed.

This law is called the “Cartel Law on Oil Production and Export” or better known as “NOPEC”, whose bill was designed to eliminate the state’s immunity, allowing OPEC and its national oil companies to be sent. sued under the U.S. antitrust law (Sherman Act) by that country’s Department of Justice on the grounds that the organization is affecting oil prices. This is totally absurd, but reason does not predominate in these interventionist maneuvers.

For 2018, Donald Trump on Twitter called OPEC a monopoly and expressed his tirade against the organization for keeping oil prices too high and called for them to be lowered, as if OPEC could do so at the push of a button. With these signals, in Congress, the faithful promoters of NOPEC lobbied, taking advantage of Trump’s exaltation against the organization.

But in April 2020, given the collapse in demand, Trump realized he should join the OPEC + initiative to create unified and coordinated guidelines in a consensual way. The big change has taken place here, with the US president reporting that he has spoken with Saudi Crown Prince Mohammad bin Salmán and Russian President Vladimir Putin to reduce oil production and thus maneuver future scenarios.

A few days after the unprecedented consolidation, Trump announced that “the great oil agreement with OPEC + is over.” With this, the role of OPEC as an intergovernmental organization to engage the oil policies of the member countries and this time, accompanied by the G20 countries, has been strengthened. And this has proved difficult during this difficult year, as the Organization has devised the means to ensure that market prices stabilize in order to avoid harmful fluctuations.

Meanwhile, NOPEC has been waiting.

Future scenarios with Biden at the helm

To predict the global oil scenario, it is mandatory to include the United States as the main player in the geopolitical energy orbit, both because of its desperate obsession with controlling the energy resources of others and because of its ideology of technological domination. It is no secret that the root or essence of the oil industry in any country, as we know it today, comes from the United States.

Based on the role the United States plays in this context, Joe Biden recently released his government-led comrades for the next few years. Characters like Kamala Harris and Anthony Blinken are some of Barack Obama’s students who will now lead this administration. But the focus was also on who would hold the energy secretary, and a few days ago he reported that Jennifer Granholm, a former governor of Michigan and promoter of electric vehicles, would chair that space.

Barack Obama speaks with Michigan Governor Jennifer Granholm during the graduation ceremony of the University of Michigan in Ann Arbor, Michigan, on May 3, 2010 (Photo: White House)
In addition, Biden appointed Gina McCarthy, former director of the Environmental Protection Agency (EPA), to coordinate climate change issues. McCarthy currently heads the Natural Resources Defense Council, which has sued the Trump administration countless times.

This is not surprising, because during his campaign, Biden was explicit with the Green New Deal policy and, internationally, the reinstatement of the United States in the process of complying with the Paris agreements is a fact.

Now, it looks like Democratic “heroes” will save the planet, but in the real world, the facts are far from that movie. Remember that the shale boom began around 2008, just as Barack Obama took office for the first of two terms as president, making the United States the largest oil and gas producer of this century. .

Biden will not eliminate fracking, he is not naive, because fracking and shale in the United States are and must be assumed as the state policy of the North American country. What will certainly happen downstream is a redevelopment of oil companies, where some will benefit more than others.

In this regard, the alert must be maintained because this group accompanying Biden is an expert in drawing up passive-aggressive plans in various international courts to impose agendas that serve as an excuse to invade or besiege, even more, countries that do not allow them to be protected. The climate agenda will be one of the crucial maneuvers it could adopt against Venezuela next year.

A few weeks after the end of this resounding year in the field of energy, we must be sure of one thing that the global oil instability will continue.

(Taken from Mission Truth)