Oil prices are edging slightly higher today on very light holiday trading volume, but the question is: have prices risen too far too fast?
Earlier this month both China and Russia reported that they have developed a Covid-19 vaccine that has been clouded by doubt throughout the world since Phase III testing had not been performed. The vaccines have been developed by CanSino Biologic from China and the Gamaleya Institute in Moscow and are a modification of adenovirus type 5 (AD5). AD5 is currently being used to treat the common cold, and scientists and researchers are now concerned with the effectiveness of the vaccine.
With the global COVID-19 case count reaching 20 million, Russia has approved a vaccine for the disease. There is, however, suspicion around the approval since the trials have yet to conclude the Phase 3 testing. To solidify the vaccine approval, Russian President Vladimir Putin, stated the vaccine is working “effectively enough”- far too vague for most medical professionals throughout the world. What does “effectively enough” constitute? With the vaccination trials being rushed already through the world, how many corners are being cut by the nations at the head of the vaccination development? Like many questions that hint toward political gains and propaganda, we may never truly know the answer to how many corners are being cut on a vaccination approval that could indeed affect the entire globe for better or worse.
The United States has joined the United Nations and Libyan government’s investigation into the potential brokering of an unlawful sale of Libyan oil by General Khalifa Haftar. The rebel general reportedly traveled to Venezuela to discuss oil contracts to raise money for his Libyan National Army (LNA) through the sale of crude oil. Libya’s National Oil Corporation (NOC) is the only legal entity allowed to market Libyan crude as a result of sanctions given by the United Nations during the country’s civil war.
OPEC+ came to an agreement earlier this month to institute record-breaking production cuts of nearly 10 million barrels per day. The production cuts were set to take effect on May 1st, but some members have taken it upon themselves to start earlier. Kuwait and Saudi Arabia have both made the decision to start scaling back production to work towards the production cut goal. Saudi Arabia has scaled back production from 12 million barrels per day(bpd) over the weekend to reach its goal of 8.5 million bpd. Kuwait is OPEC’s fourth largest producer and they have also made the decision to start the cuts early. Kuwait’s Oil Minister Khaled Al-Fadhel said that starting the cuts early was because they felt a responsibility to address the market conditions.
Over the weekend, it came as a surprise to the oil industry when prices crashed more than 30% after the recent OPEC+ alliance issued an all-out price war between Russia and Saudi Arabia, leading the market with cheaper oil. During the OPEC+ meeting last week, Russia rejected a proposal to cut 1.5 million barrels per day of production.
In an attempt to curtail the downward plunge of global oil prices, Russia is considering supporting cuts among OPEC and its partners. On Thursday, Sergey Lavrov, Russia’s top diplomat, confirmed Russia’s support for production cuts following a conversation between President Putin and the King of Saudi Arabia. However, Energy Minister Alexander Novak said on Friday that Russia needs a few days analyze the oil market and clarify its position.
This past Monday, China has launched its new oil and gas pipeline group. This group consists of multiple assets combined into one group with a net worth of between 80 – 105 Billion USD. This has been a plan of China for years, but according to reports, it was just approved this past year.
WTI oil prices rose Monday morning to $56.94/barrel due to a barrage of bullish headlines which puts this year’s oil rally north of 22% and climbing.
The world of crude oil is buzzing right now, as OPEC is currently meeting in Vienna, with a goal of reaching an agreement over production levels within the next 6 months. Oil prices dropped over 3 percent on Thursday as OPEC agreed to cut production. However, the cartel is waiting to decide on the actual size of reduction until after a discussion with Russia. This could delay the decision until Friday, when OPEC is set to meet with non-members.