Resurgence of Geopolitical Tensions Threatens Supply Chains and Sends Energy Prices Soaring
The Strange: Oil barrel poised to touch $120 amid ongoing tensions
Najah Bilal
Kuwait plays a pivotal and strategic role within the OPEC+ alliance, with its oil policy centered on supporting market balance and enhancing collective action. This role is clearly evident through its full commitment to the alliance’s collective decisions to maintain global energy market stability.
In an analytical reading of the recent OPEC+ decisions, which coincided with intensifying geopolitical conflicts in the Middle East that drove up energy prices, economic advisor Abdullah Al-Ghareeb stated in a special interview with "Al-Siyasa" that the current rise in oil prices resulted from escalating tensions between the United States and Israel on one side, and Iran on the other. This has led to volatility in global energy markets, accompanied by alertness and cautious anticipation. He cited the proximity of black gold prices to the $100-per-barrel threshold, noting that prices had surpassed $98 in recent days, compared to approximately $87.44 on August 29.
$120 per barrel
Al-Ghareeb considered this rapid surge, equivalent to about $11 in a short period, as reflecting the growing pressure on the supply-demand system. He predicted that oil would continue its meteoric rise to touch levels of $120 per barrel in the near future, due to threats facing strategic waterways such as the Strait of Hormuz and the subsequent restrictions on logistics supply chains and global market supplies.
He pointed out that amid these dramatic shifts, the Kuwaiti stance emerged as a pivotal stabilizing factor and a shrewd strategic reading of the complex landscape. He praised the confirmation by Oil Minister Tariq Al-Roumi of Kuwait’s firm commitment to OPEC+ alliance collective decisions and the stability of its oil production for next October at its current level of 2.67 million barrels per day, without any adjustment.
Balancing supply and demand
Al-Ghareeb emphasized that this step reflects the cautious and well-considered strategic vision adopted by Kuwait to address current fluctuations and ensure a delicate balance between supply and demand forces, thereby preventing random speculation in energy markets. He noted that this commitment from all parties acts as a true safety valve for the global energy system, prioritizing sustainable price stability over entering a frantic competition for individual market shares, which could result in uncalculated surpluses or shortages harming both producers and consumers alike.
Fixing production
He added that fixing production at September levels confirms that the oil alliance is following a flexible and rational approach to adapt to the slowdown in global demand growth. Therefore, maintaining the cohesion of the oil alliance is the strongest weapon to protect the public budgets of Gulf states, including Kuwait, which recorded a financial deficit resulting from fluctuating revenues and increasing government spending. Al-Ghareeb noted that Kuwait’s oil policy does not stem from quick-profit calculations but is rooted in a long-standing legacy of joint diplomatic oil efforts, fully aware that any disruption in supply could lead to global stagflation, ultimately harming everyone. He added that Kuwait has favored consensus solutions to ensure the sustainability of global energy flows and protect market stability from the surrounding geopolitical storms in the region.
