For most of the 20th century and the first decade of the 21st century, the international oil market was the focus of geopolitical and geo-economic concerns. As the largest and most common form of energy used by humankind, oil plays an extremely important supporting role in industrialization and urbanization. It is also during this period that China saw its rapid emergence as a market power and "world factory", and its assumption of the role of an important player and stakeholder in the international oil market.
However, in recent years, the international energy market has undergone some noteworthy and structural changes. There are two main types of changes, one is the change in demand. With the slowdown in global economic growth and the increase in new energy and shale gas applications, the demand for oil in the global market has slowed down. The other is the changes in oil supply. Due to increased production in major oil producing countries, especially OPEC and Russia, the "energy self-sufficiency" in the United States brought about by its own sharp increase in oil and natural gas production has curbed the rise in international oil prices.
ANBOUND's macro research team has repeatedly pointed out that energy self-sufficiency in the United States has a major impact on the global oil market. As the world's largest oil consumer and importer, the United States has affected the demand pattern of the international oil market to a considerable extent. In addition, the strong influence of the United States on the "petrodollar", coupled with the U.S.' military power in its global layout, all these have formed the pattern of oil supply and demand in the past.
Now, a new pattern is emerging. As the United States becomes a self-sufficient country and a net exporter of oil, this has significantly changed the supply and demand pattern of the global oil market. ANBOUND's research team has analyzed that the U.S. energy self-sufficiency will affect the global market in several aspects. Firstly, large U.S. buyers will gradually withdraw from the international oil market, and the supply and demand structure of the international oil market will undergo major adjustment. Secondly, the geopolitical significance of the Middle East as oil-producing region to the United States will change. Thirdly, the United States will enter the international market as an oil seller and compete against other existing oil-producing countries.
This effect is rather obvious now. The Organization of Petroleum Exporting Countries (OPEC) has been striving to support crude oil futures this year due to the deterioration of global economic growth prospects and the continued deterioration of U.S.-China trade disputes. However, can OPEC led by the Middle East maintain its long-term impact on the world crude oil market? This is rather questionable. The biggest variable in the pattern of the international oil market is the U.S. self-sufficiency that we have repeatedly emphasized. It is worth noting that the U.S. government wants not only energy self-sufficiency, but it also hopes to dominate the international energy market.
At the World Energy Congress in Abu Dhabi on September 9th, U.S. Deputy Secretary of Energy Dan Brouillette made it clear that the United States hopes to achieve the dominant position of energy, no matter what happens to international oil prices. "Our energy policy is not designed to affect price, that's not we do for a living. And yet it does because of our production numbers," he stated. Brouillette also pointed out that "the president has an 'all of the above' strategy. He talks often about energy dominance and the world often asks: what does that mean? It just simply means that we are going to produce as much energy as we can, as cleanly as we can and as affordably as we can." "And whatever happens to the world price of oil, whatever happens to the world price of whatever, electricity, it doesn't really matter," Brouillette added.
This statement shows the ambition of the U.S. government to dominate the global energy market. This ambition comes from its own oil self-sufficiency and its increasing production capacity. Over the past decade, the U.S. oil production has more than doubled to 12.3 million barrels per day, making it one of the world's largest oil producers. It now appears that the international oil market will be overwhelmed by more crude oil, and oil prices are facing further downward pressure. Saudi's Energy Minister Prince Abdulaziz bin Salman attempted for OPEC to cut global crude oil supply to support prices and balance the market, and to this Brouillette's view is extremely conceited, where he remarked that , " he (Prince Abdulaziz)'s got a very tough road ahead of him, I must say. U.S. production will continue to go up all throughout 2019 and certainly to 2020".
It should be pointed out that the strategic intentions and actions of the United States to dominate the global energy market are of great significance to China. As the world's largest oil importer, China's future energy security and energy costs will be increasingly influenced and controlled by the United States. We believe that under the background of trade war and changes in the global oil market, China has become the largest stakeholder in the international oil and gas market, and this positioning will affect its oil and gas security strategy. With the changes in the global oil market driven by the changes from supply and demand of yesterday to geo-security today, the importance of oil and gas prices is giving way to availability and safety.
Final analysis conclusion:
On the whole, China should increase energy cooperation with the United States. When the trade dispute has passed, stable oil and gas cooperation is expected to become a new bond between China and the United States. From global and security perspectives, China does need to maintain a long-term and stable supply of oil security.
