On Monday, French President Emmanuel Macron called on oil producers to ramp up production at “exceptional” volumes, the AFP news agency reported.
But when oil exporters meet on Thursday to decide whether to increase production, they will have to reckon with a looming global recession that threatens to reduce demand for their crude oil and reduce their ability to control its price.
A recession is an “increasingly palpable risk” to the economy, Citigroup analysts wrote in a note Wednesday as they assess the trajectory for global growth over the next 18 months.
Experts say oil producers cannot prevent the downturn by pumping more. And if a recession does happen, adding more barrels risks the price of crude oil crashing and hurting their own economies.
Yousef Alshammari, CEO and head of oil research at CMarkits in London, said oil producers are realizing that the economic impact of the rate hikes has not yet been felt on the oil market, and they are acting accordingly.
OPEC alone does not have the capacity to avert a recession, said Amena Bakr, chief OPEC correspondent at Energy Intelligence. “I think a recession cannot be circumvented… The state of the economy cannot be sustained. At some point, there has to be a crash and reset,” she said.
At its latest meeting on June 2, OPEC has already agreed to increase production by 648,000 barrels per day in July and August, compared to the 432,000 barrels per day initially agreed until September.
“It would be a nice gesture” that would help bring inflation in the United States under control in the near term, Alshammari said.
But Saudi Arabia, the producer with the most spare capacity, has sounded the alarm about oil countries’ declining ability to keep pumping more oil.
“The world needs to wake up to an existing reality,” Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg in May. “The world is running out of energy at all levels.”
US Special Envoy Malley meets Qatari FM in Doha over potential talks with Iran
US Special Envoy to Iran Robert Malley is expected to meet with Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani in Doha on Monday, a diplomatic source who was aware of the visit told DailyExpertNews. Iranian negotiator Ali Bagheri Kani will meet with Qatari officials the next day, the source added.
- BackgroundThe high-level visits come after EU foreign policy chief Josep Borrell told a news conference in Tehran on Saturday that his team would broker possible future indirect talks between the US and Iran “in a Gulf country”. The talks would 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 has reported that Qatar will be the destination for these indirect bilateral talks, Doha has not confirmed that it will host them.
- Why it matters: Western powers fear Iran will get closer to producing 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 the nuclear talks, told Borrell that Iran will continue to develop its nuclear program until the West changes its “illegal behavior”.
Erdogan meets with leaders of Sweden and Finland for NATO summit
Turkish President Recep Tayyip Erdogan will attend a round of talks with leaders of Sweden and Finland, as well as NATO, ahead of a NATO summit Wednesday in Madrid, Turkish presidential spokesman Ibrahim Kalin said on Sunday. He said Erdogan’s attendance at the talks “does not mean we will step back from our position.”
- Background: Finland and Sweden have applied for NATO membership in response to Russia’s invasion of Ukraine. But the bids met resistance from Turkey, which was furious at what it’s saying, Helsinki and Stockholm’s support for Kurdish militants and arms embargoes against Ankara.
- Why it matters: Kalin said Turkey and the Scandinavian countries largely agreed on the issues in the preliminary talks and would be in a better position in Madrid if they could agree during talks on Tuesday. Earlier this month, Turkey said the documents it had received from Sweden and NATO in response to earlier written demands it submitted to the two candidates were far from meeting its expectations. Kalin has previously said 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 news conference Monday, a day after Iraq’s prime minister pushed for talks between the regional rivals to resume. Iraqi Prime Minister Mustafa al-Kadhimi was in Tehran on Sunday, a day after visiting Saudi Arabia.
- Background: Iran and Saudi Arabia cut ties in 2016, with both sides backing 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 negotiations in March.
- Why it matters: Kadhimi’s visit came as a months-long stalemate in indirect talks between Tehran and Washington that are expected to break through in the coming days to secure the 2015 nuclear pact that curtailed Tehran’s nuclear program in return for sanctions relief. When Biden visits Riyadh in mid-July, talks are expected to include Gulf security concerns over Iran’s ballistic missiles.
Around the region
An Arabic comic book has become the center of a new controversy with outraged social media users in the Gulf Arab states accusing it of normalizing homosexuality for children.
One of the oldest children’s comic books in the Gulf region, the UAE-published magazine “Majed” featured a rainbow-colored character in its May issue that turned everything it touched into rainbow colors.
The campaign comes as many in the region are boycotting foreign companies for their solidarity with Pride Month, which falls in June, but it stands out because it focuses on a regional brand that is a household name for many children.
The UAE Media Regulatory Office and the Abu Dhabi Media Company, the magazine’s publisher, did not respond to DailyExpertNews’s request for comment.
By Mohammed Abdelbary
Photo of the day
This story was updated to correct the OPEC meeting to Thursday.