Last Sunday’s decision by OPEC+ members towards oil production cuts has implications for global oil supply causing oil price hikes, but it is expected the markets will stabilise, says Energy Minister Stuart Young.
Young responded yesterday following the decision by the nine members of OPEC+ to reduce collectively production of crude by 1.15 million barrels per day. The output cut is being undertaken by Saudis, with 500,000 barrels per day, and with the United Arab Emirates, Kuwait, Iraq, Oman, Algeria and Kazakhstan contributing smaller cuts.
They announced that the substantial voluntary production were geared at “supporting the stability of the oil market “-.
The development sent oil prices surging. Oil prices, which had dipped to US$70 in mid March, rose six per cent yesterday to US$80.42 a barrel for New York crude for May delivery.
Brent crude for June delivery also increased more that six per cent yesterday, rising US$5.04 to US$84.93 a barrel.
The production cuts are due to begin in May and will last until year end.
Queries on the implication of the situation for T&T were sent via WhatsApp to Finance Minister Colm Imbert and Communication Minister Symon De Nobriga. But there was no reply.
However, Young responded, saying: “This latest decision by OPEC+ has implications for global supply and the market has reacted as expected with oil prices increasing. It’s expected that markets will stabilise. Oil prices have been volatile and may continue so to be,”
“Changes in the price of global commodities such as oil, natural gas, LNG, ammonia and methanol affect T&T’s revenue and are constantly monitored by the Ministries of Energy and Finance,” said Young.
Opposition United National Congress MP Dave Tancoo, who is the party’s spokesman on finance, said: “If only this country had a refinery that would be refining oil, then it would have received substantial benefits from higher global oil prices. We’d have earned substantial foreign exchange, from higher international oil prices.”
“Instead, right now we have to be very concerned about how much we will be paying for fuels that we are now forced to import because of this government’s lack of foresight, lack of initiative and attempts to cover up corruption.”
Some businesspeople expressed concern on what higher oil prices may bring in terms of T&T’s fuel subsidy where Government ‘s contribution is now capped at $1 billion with consumers’ input making up any further requirement for the subsidy.
One top Government official, however, claimed there would be “very little” effect of the reduction of oil production on T&T’s revenue and the fuel subsidy aspect.
“That’s so because the market is extremely volatile and it will be premature to make any announcement.”
Speaking yesterday, US Treasury Secretary Janet Yellen described the OPEC+ oil production cut as an “unconstructive act,” which could hurt US efforts to lower inflation.
“I think it’s a regrettable action that OPEC decided to take. I’m not sure yet just what the price impact will be, I think we need to wait a little longer for, you know, to really assess that,” Yellen said.