WTI crude futures fell back to a low level of 75.09 US dollars from October 25‘s high level of 85.41 US dollars due to Biden’s effort to bring down the rising oil prices within the passed two weeks, instead of the supply exceeding the demand in the market. First of all, Biden asked the OPEC members to increase oil production, and then ordered crude oil released from strategic reserve, in accordance with other major oil importing countries, lowering oil prices by over 10 US dollars from a high level.
Biden has been imposing publicly pressure on the OPEC producers and Russia to raise daily oil production, but rejected by them with difference excuses. Then the US announced a plan to release oil from the Strategic Petroleum Reserve with China, Japan, India, and South Korea etc in a bit to help cool oil prices, which later declined constantly on account of Biden‘s action. The reason why Biden was committed to dampening the rising oil prices is due to the falling domestic approval rate mainly caused by the increase in inflation and prices, exerting an adverse influence on the people’s livelihood.
Biden will attend the mid-term election campaign next year as the representative of Democratic party, which is more likely to lose the control over both houses of Congress because of recently declining popularity, giving way to the Republican party. It is well known that petroleum enterprises are the main source of funds of the Republicans, as well as critical loyal supporters. So the Republicans have a better relationship with Saudi Arabia and Russia, compared with the Democrats. In terms of conspiracy theory, the petroleum companies may push up oil prices deliberately in order to lower Biden‘s approval rate and help the Republicans win next year’s mid-term election.
On the other hand, Saudi Aramco, the state-owned petroleum enterprise of Saudi Arabia, still hasnt realized the secondary listing overseas due to the pandemic. Recently, oil prices have rallied, indicating the possibility that Saudi Arabia plans to drive oil prices higher to help the company accomplish secondary listing overseas next year. No matter what the reason of boosting prices, oil producers are still profitable.
According to the latest news, probably dissatisfied with Biden‘s action to bring down oil prices, the OPEC producers are considering canceling the scheme of extra 400k barrels of oil per day, making oil prices rally at the bottom. The OPEC members and Russia will hold a meeting on December 2, when they are expected to discuss about how to respond to Biden government’s action. If the OPEC finally makes the decision to cancel the plan to increase 400k barrels of oil and further reduce the oil production, oil prices are estimated to bounce back and rocket, reaching directly the level of 100 US dollars.