Why OPEC may not have an answer to high oil prices

After invasion of Ukraine, oil this year rose to a 14-year high. Prices have eased slightly since then, with Brent crude futures at around $113 a barrel as of Monday, but Western countries have been pressuring the oil states to keep adding more. oil to market.

On Monday, French President Emmanuel Macron urged oil producers to increase production by “exceptional” volumes, the AFP news agency reported.

But when oil exporters meet on Thursday to decide whether to increase production, they will have to take into account a looming global recession that threatens to reduce demand for their oil and reduce their ability to control its price.

How central banks raise interest rates to control inflation, the global economic downturn over the next 18 months became more likelyeconomists warn.

A recession is an “increasingly tangible risk” to the economy, analysts at Citigroup wrote in a note Wednesday, assessing the trajectory of global growth over the next 18 months.

Experts say oil producers cannot forestall the downturn by increasing production. And if a recession does occur, adding more barrels risks crashing oil prices and hurting their own economy.

The only countries that able to pump more oil, Saudi Arabia and the United Arab Emirates said the oil market is balanced and there is no need to produce more. Together they can increase production by 2.5 million barrels per day.

Youssef Alshammari, CEO and head of oil research at CMarkits in London, said oil producers are aware that the economic impact of the rate hike has yet to be felt in the oil market and they are acting accordingly.

The Middle East will not save Europe if it cuts off Russian oil

OPEC alone cannot prevent a recession, said Amena Bakr, OPEC’s chief correspondent at Energy Intelligence. “I think that recession cannot be avoided… The state of the economy cannot be sustainable. There has to be a crash and a reboot at some point,” she said.

At its most recent meeting on June 2, OPEC had already agreed to increase production by 648,000 bpd in July and August, up from the 432,000 bpd originally agreed until September.

Like US President Joe Biden preparing for his visit to Saudi Arabia in mid-July, there were speculations that Riyadh might add more barrels as an act of goodwill.

“It would be a good gesture” to help control inflation in the United States in the short term, Alshammari said.

But Saudi Arabia, the producer with the most spare capacity, is sounding the alarm about the declining ability of oil countries to continue producing more oil.

“The world needs to come to terms with the reality,” Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg in May. “The world is running out of energy capacity at all levels.”

Digest

US Special Envoy Malley to meet Qatari Foreign Minister in Doha over possible talks with Iran

US Special Envoy for Iran Robert Mulley is expected to meet Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani in Doha on Monday, a diplomatic source briefed on the visit told CNN. The source added that Iranian negotiator Ali Bagheri Kani will meet with Qatari officials the next day.

  • Background: The high-level visits came after EU foreign policy chief Josep Borrell told a press conference in Tehran on Saturday that his team would mediate possible future indirect talks between the US and Iran “in the Gulf country.” The talks will focus on “unresolved issues” related to the implementation of the 2015 nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA). While Iranian state media have reported that Qatar will host these indirect bilateral talks, Doha has not confirmed that it is hosting them.
  • Why is it important: Western powers fear that Iran is moving closer to building a nuclear bomb if it decides to do so, although Iran says its intentions are peaceful. Ali Shamkhani, secretary of Iran’s Supreme National Security Council, which makes decisions for Tehran in nuclear talks, told Borrell that Iran will continue to develop its nuclear program until the West changes its “illegal behavior.”

Erdogan to meet leaders of Sweden and Finland ahead of NATO summit

Turkish President Recep Tayyip Erdogan will take part in a round of talks with the leaders of Sweden and Finland, as well as NATO on Tuesday ahead of the NATO summit in Madrid on Wednesday, Turkish presidential spokesman Ibrahim Kalin said on Sunday. He said that Erdogan’s presence at the talks “does not mean that we will retreat from our position.”

  • Background: Finland and Sweden applied to join NATO in response to Russia’s invasion of Ukraine. But the bids have faced resistance from Turkey, which has been outraged by what it calls Helsinki and Stockholm’s support for Kurdish militants and an arms embargo on Ankara.
  • Why is it important: Kalin said Turkey and the Nordic countries had largely agreed on issues in preliminary discussions and would be in a better position in Madrid if they could agree on them during talks on Tuesday. Turkey said earlier this month that the documents it received from Sweden and NATO in response to its earlier written demands for two candidates fell far short of its expectations. Kalin has previously stated that the Madrid summit is not a deadline.

Iran says Saudi Arabia wants to resume diplomatic talks with Tehran

Saudi Arabia wants to resume diplomatic talks with Tehran, Iranian Foreign Ministry spokesman Saeed Khatibzadeh said at a press conference on Monday, a day after the Iraqi prime minister pushed for resumption of talks between regional rivals. Iraqi Prime Minister Mustafa al-Qadimi was in Tehran on Sunday, the day after his visit to Saudi Arabia.

  • Background: Iran and Saudi Arabia severed ties in 2016, and both sides supported allies waging proxy wars across the region, from Yemen to Syria. The fifth round of talks between them took place in April, after Iran suspended talks in March.
  • Why is it important: Kadhimi’s visit has been a months-long stalemate in indirect talks between Tehran and Washington that are expected to break off in the coming days to conclude a 2015 nuclear pact that curbed Tehran’s nuclear program in exchange for sanctions relief. During Biden’s visit to Riyadh in mid-July, the talks are expected to touch on security issues in the Gulf states related to Iranian ballistic missiles.

By region

The Arabic comic has become the center of a new controversy with outraged social media users in the Arab Gulf countries accusing it of normalizing homosexuality among children.

Published in the UAE, Majed, one of the oldest children’s comics in the Gulf region, featured a rainbow character in its May issue that turned everything it touched into rainbow colors.

The campaign comes as many in the region are boycotting foreign businesses for their solidarity with Pride Month, which falls in June, but it stands out in that it targets a regional brand that is a household name for many children.

Some on social media have even gone so far as to suggest subliminal messaging in the comic. In one speech bubble, a character says “I have the ability color things; Now Ali will regret that he cannot be like me.” The Arabic word for “like me” (mitli) has the same spelling as the word homosexual (mitli), minus the diacritic.
Others, however, noticed that some read too much into the character. “Now it’s forbidden to use the colors of the rainbow?” tweeted by one user.

The UAE Media Regulatory Authority and Abu Dhabi Media Company, the magazine’s publisher, did not respond to CNN’s request for comment.

The campaign kicks off as countries like Saudi Arabia and Kuwait crack down on rainbow flags during Pride Month. Ministry of Trade and Industry of Kuwait published a guide on how to distinguish a pride rainbow from a regular rainbow, and encouraged the public to report on the types of the pride flag. Saudi Arabia, meanwhile dealt with rainbow toys and clothes.
homosexuality is illegal in most Gulf countries, including the UAE. Earlier this month, the country banned Disney’s animated film Lightyear for “violating national media content standards.” Ban stems from a same-sex kiss in the film, although it is not explicitly listed as the reason for the ban.

Mohammed Abdelbari

Photo of the day

Afnan Almarglani, the first woman from Saudi Arabia to be certified as an autocross instructor, adjusts her helmet in front of her car at Derab Circuit in the Saudi capital Riyadh June 26.

This story has been updated to correct the day of the OPEC meeting for Thursday.