In a surprising turn of events, a new alliance formed between BRICS and OPEC is reshaping the global oil market landscape as the global energy war escalates.
This alliance, which aims to challenge the dominance of Western economies, has weaponized oil as a means to assert their control over global energy supply resources. As a result, the world is witnessing a surge in oil prices, raising concerns for Western economies and their inflationary pressures.
Oil Becomes a Weapon as BRICS and OPEC Flex Dominance Over Global Energy Supply –
Expect Inflation to Soar Once Again
The shockwaves began when Saudi Arabia and Russia, two key players in the oil market, announced an unexpected extension of production cuts. These are the latest moves in the escalating global energy war.
Saudi Arabia, in a move that caught markets off guard, declared an extension of the voluntary cut of 1 million barrels per day (b/d) for an additional three months, till the end of December. This decision goes well beyond the initial market expectation of just one more month.
The Saudi press agency SPA emphasized that the voluntary cut would be reviewed monthly, allowing for the possibility of further reductions or increased production as deemed necessary. This extension is aimed at reinforcing the precautionary efforts made by OPEC countries to stabilize the oil market.
Following suit, Russia swiftly announced its commitment to extend its reduction of oil exports until the end of the year. As an added surprise, Russia pledged an additional 300kb/d in voluntary oil cuts, which will remain in effect until December 2023.
The impact of this unexpected alliance and their concerted efforts to manipulate oil supply has been profound. Brent Nov’23, a benchmark for global oil prices, surged above $90 for the first time in 2023.
Meanwhile, WTI Oct’23, the U.S. crude oil benchmark, reached its highest price of the year, shaking the hopes of the Federal Reserve for a decline in headline inflation. These price surges reflect the immense power that the BRICS and OPEC alliance wields over the global energy market.
Analysts and experts view this development as a strategic move by BRICS and OPEC to challenge the dominance of Western economies, particularly the United States.
The weaponization of oil demonstrates their determination to assert control over global energy supply resources and reshape the balance of power. By tightening production cuts and driving up oil prices, BRICS and OPEC seek to exert their dominance and weaken Western economies heavily reliant on energy imports.
This shift in global energy dynamics poses a significant challenge for Western economies, including the United States. President Biden, who recently sold a large portion of the U.S. strategic oil reserves, now faces the daunting task of refilling the Strategic Petroleum Reserve (SPR) amidst soaring oil prices.
With projections indicating that oil prices may reach $100, efforts to stabilize domestic energy supply and mitigate rising inflationary pressures become even more crucial.
As BRICS and OPEC forge ahead with their strategy of weaponizing oil, the financial world watches with a mix of anticipation and concern. The once-unassailable dominance of Western economies over global energy resources is being put to the test.
Whether these new alliances succeed in their pursuit of reshaping the energy landscape remains to be seen, but one thing is clear: oil has become a powerful weapon in their hands, capable of reshaping the balance of power in the global economy.
Supporting article: https://www.zerohedge.com/markets/oil-soars-new-2023-high-after-saudis-russia-surprise-extended-expanded-production-cut
