Gail Alexan­der

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.