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Gas prices: Putin ‘going to keep squeezing’ says expert
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The cost of natural gas and coal are at their highest in recorded history, as a squeeze on energy supplies in Europe and Asia sends prices skyrocketing for millions of households in the UK and beyond. Now, the crunch on energy has spread to the US, while OPEC – the Organization of the Petroleum Exporting Countries – refused calls from the Joe Biden administration to help resolve the issue.
The organisation – which is made up of 13 oil-producing countries including Russia, Algeria, Iraq and Venezuela – snubbed calls from the White House to accelerate plans to increase crude production in an attempt to help tackle the growing energy crisis.
The OPEC+ group – which has included Russia since 2016 – said on Monday it would stick with a plan formulated this summer of only gradually increasing oil production by 400,000 barrels a day each month, despite warnings of a growing deficit between supply and demand.
The decision risks inflaming tensions between OPEC nations and large energy consumers such as the US, UK and China, amid worries that energy cost inflation could derail economic recovery after the pandemic.
After the snub, US oil prices rose to their highest levels in seven years.
US oil benchmark West Texas Intermediate jumped 3 percent after the meeting to more than $78 a barrel for the first time since 2014 on Monday.
Brent crude, the international marker, rose to $82 a barrel for the first time in three years.
On Tuesday, the former was trading at about $77.80 while the latter held at about $81.60.
Jen Psaki, the White House press secretary, said: “We’re going to use every tool at our disposal even as we’re not a member of OPEC to ensure we can keep gas prices down for the American public.”
She said the US was trying to negotiate a “compromise solution to allow those proposed production increases to move forward” with OPEC but stopped short of blaming the producer group for the crude price surge.
What is OPEC?
OPEC was founded on September 14, 1960, in Baghdad by the first five members – Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
OPEC is now made up of Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, DR Congo, Saudi Arabia, United Arab Emirates and Venezuela.
There is also OPEC+, made up of 10 additional exporting countries: Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan, Sudan.
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Since 2016, the group has cooperated in fixing the global crude oil prices by agreeing to production quotas that keep global production low.
Together, the group controls more than half of global oil supplies.
OPEC+ agreed record production cuts last year when oil demand collapsed at the peak of lockdowns around the world.
But last week, investment bank Goldman Sachs warned that global crude stockpiles were now shrinking at a record pace and said it thought prices could rise to $90 a barrel later this year.
Saudi Arabia, OPEC’s de facto leader and one of the US’s main allies in the Gulf, failed to hold its usual press conference after the online meeting of energy ministers for the second month in a row.
The nation declined to explain its strategy or whether it believes the oil market is undersupplied.
But people familiar with discussions said Prince Abdulaziz bin Salman, the country’s energy minister and half brother of Crown Prince Mohammed bin Salman, did not believe oil prices have risen substantially enough in recent months to justify changing course, despite other energy commodities having surged.
Oil demand could also fall again this winter if the Coronavirus pandemic again requires lockdowns.
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