News
Crude Oil Dips to $85; Will Saudi Arabia Cut Output Despite Setbacks?
Following the decision by Saudi Arabia and many other oil-producing countries to significantly reduce production in November, international crude oil prices have seen a rapid increase.
The United States, which failed to exert pressure, warned that it would inevitably respond to this action. Now, the U.S. response has come, with another significant interest rate hike expected in November.
International crude oil prices quickly plummeted back to $85 within a short period, with the maximum drop exceeding $8.
It appears that Saudi Arabia's intentions have suffered a severe setback.
01
Previously, in the third quarter, international crude oil prices had been continuously falling, with the maximum drop exceeding 25%.
OPEC member countries, on one hand, blamed the U.S. interest rate hikes, and on the other hand, began to take action.
When rumors of the upcoming production cuts emerged, crude oil prices started to rise rapidly. At the close on September 30, the price was still at $79.5, but it continued to rise thereafter, especially after the official announcement of the production cut decision, until it reached $92.6 at the close on Friday, October 7.
Advertisement
The United States was very angry about this but also very helpless. The rise in crude oil prices is a significant blow to the U.S. efforts to control inflation.
In response, the U.S. stated that it would reassess its relationship with Saudi Arabia and would definitely respond.But the response came faster than expected.
Last week, the United States successively released a series of economic data, and all the data pointed to one consequence: the United States will continue to raise interest rates in November and December to control inflation.
Many investment banks have already believed that there will be a 75 basis point rate hike in November, and now, there are even predictions of a 100 basis point rate hike.
Commodities priced in US dollars fell upon hearing the news, with international crude oil prices dropping from a high of $93.64 on Monday to a low of $85.20 on Friday.
Oil-producing countries such as Saudi Arabia hope to push up international prices by reducing production, but the United States easily used the method of raising interest rates (currently just the expectation of rate hikes) to once again bring international crude oil prices down to a low level.
Now, some oil-producing countries have changed their minds, thinking that since they cannot maintain oil prices, it might as well produce more oil and increase revenue by expanding production.
In this case, the agreement to reduce production may be undermined from within.
However, for oil-producing countries, the high or low price of oil is just a matter of how much money they make.The real price is being paid by Europe. Since the United States does not need to import crude oil and has a large amount of natural gas that can be exported, the United States is actually the beneficiary.
Unexpectedly, even China has also profited from this.
Due to the explosion of the "Nord Stream" pipeline, Europe cannot rely on the pipeline for the time being and can only seek LNG ships to fill the gap. As a result, the price of American LNG has been continuously rising, and even the shipping price has been continuously rising.
Now the price has affected the shipbuilding price of LNG.
The dilemma of one ship being hard to find has attracted more and more attention to Chinese LNG ships in the global market, because Chinese-made LNG ships, with their strong technology, continue to sail to ports around the world.
According to the person in charge of the relevant department of China Shipping Group, as of the end of September this year, the global order for large LNG ships has far exceeded the total of previous years.
At the same time, the price of LNG ships has recently reached the highest level in history, currently reaching 240 million US dollars.
Leave A Comments