Oil Price Surge and Biden's Dilemma: Global Factors Impacting Energy Markets

A report by Lea Fayad, English adaptation by Nadine Sassine

Between the soaring global oil prices, which have risen by more than 10% since the beginning of the year (currently at $87), and the preparations for the upcoming US presidential elections, Joe Biden finds himself in a dilemma.

 

1- The US has repeatedly requested its ally Ukraine to cease shelling Russia's energy infrastructure to no avail. Washington fears that any disruption to Russia's oil production will lead to further increases in global prices, raising the cost of gasoline and other goods for US citizens. Consequently, Biden's hopes of defeating Donald Trump would be dashed.

 

2- Additionally, the ongoing conflicts in the Middle East could also negatively affect energy supplies and global prices.

 

3- The biggest challenge, contrary to Biden's intentions, is the agreement of the oil-producing and exporting countries, led by Saudi Arabia and Russia, within OPEC Plus, to cut oil production by more than 2 million barrels per day during the first quarter of this year. Members will meet to maintain this decision until June (according to Reuters), as high oil prices benefit the treasuries of these countries. For example, Saudi Arabia needs oil prices to exceed $90 per barrel (according to Fitch Ratings) to fund its massive projects, while Russia requires funds to continue its war on Ukraine.

 

Amidst all these situations, global analysts expect oil prices to reach $90 to $100 per barrel this year. If these predictions come true, OPEC+ will be at ease but Biden will remain worried.