Bitcoin’s Next Bull Run to $32000 Fueled by OPEC+ Production Cuts
XAUUSD | 13 | Cut | NOPEC | Commodity | Reserve | BTC
There is a simple rule in economics that if the supply is low and the demand is high, then the price of the goods will increase.
OPEC+ is a group of oil-producing countries. They have announced that they will decrease the supply of oil. The price of crude oil has started to rise as supply has been reduced. All of the countries that import oil may run into problems as a result of a decrease in the supply of oil.
As this news was released, the price of Brent Crude soared from $79 to $85.
How Much Production Has been Reduced?
According to them, all of the countries in the OPEC+ group will lower their oil production to a lesser level. This will result in a daily reduction of 1.16 million barrels of oil production.
The Organization of Petroleum Exporting Countries (OPEC) was founded in 1969. This group is made up of 13 nations. Saudi Arabia, Kuwait, various African countries, and Venezuela produce the most oil. When major oil-producing nations such as Russia, Bahrain, Kazakhstan, and Malaysia join OPEC, they are referred to as OPEC+.
Oil is the main source of income for OPEC+ countries, thus they constantly try to prevent oil prices from falling too low. Oil prices fell dramatically around the time of Covid, which sparked tension among OPEC+ countries because they were no longer able to profit from oil. At the time of covid, extracting oil was more expensive than selling it.
OPEC’s goal is to keep the price of oil high so that they may make more money.
Cut
A few days ago, the OPEC+ countries met, and everyone assumed that there would be no new reductions in oil output because 2 million barrels had already been reduced in 2022.
Because of the worldwide banking crisis, the price of oil has fallen. As a result, the price of Brent crude reached close to $70 in March. After then, the price of crude had risen to $76-$79, and everyone hoped that no more reductions to oil production would be imposed. Even after the price of oil had stabilized, the oil-producing countries lowered the supply in order for the price of oil to rise.
In 2023, total oil production has been fixed at 3.66 million barrels per day, which is equal to 3.7% of the global demand for oil.
2022
When oil output was reduced to 2 million barrels per day in October 2022, then-President Biden argued that it should not be further reduced since the speed of economic growth had already slowed. The rise in crude oil prices will have an impact on all countries.
Oil Production Reduction Chart
Saudi Arabia alone will drop 0.5 million barrels out of the entire 1.16 million barrels. Iraq has reduced its oil output by 0.21 million barrels per day, the UAE by 0.144 million barrels per day, and Kuwait by 0.128 million barrels per day. As a result of this, Russia has decided to decrease output by 0.5 million barrels per day.
According to Russia, several nations have already capped the price of oil. Due to this price cap, Russia’s treaty partners must provide oil at a set rate of $60-$65 per barrel. Purchasing oil from Russia will now be more expensive.
With the reduction in oil output from all sides, many experts believe that the price of Brent crude will reach $90. The price of crude might rise as high as $100 if another country supports the oil cut.
Oil Price
With the reduction in oil output from all sides, many experts believe that the price of Brent crude will reach $90. The price of crude might rise as high as $100 if another country supports the oil cut.
The NOPEC law was approved by the US as a result of this price increase. The US tried to persuade OPEC via the NOPEC bill but failed.
Commodity
The commodity is an important pillar of every country’s economy. Because the world is a global village, even little changes in commodity prices may wreak havoc in every country. Event taking place in any corner of the world, such as the Russia-Ukraine war, has affected all countries worldwide. A country like Russia has global power and oil reserves; if any such global power gets affected then all the countries have to face trouble.
Over 50 years ago, the United States built a Strategic Petroleum Reserve to preserve the country in the case of a national emergency. Petroleum is a type of energy on which all countries throughout the world depends. Since covid, the condition of this US reserve has deteriorated. The Petroleum reserve has reached its lowest level as compared to what it used to be in 1983.
We are all aware that the United States launched an attack on Iraq. They blamed Iraq for having a biological weapon. According to some experts, the US launched the attack in order to drain Iraq’s oil reserves.
How did the Strategic Petroleum Reserve Decrease?
After the Russia-Ukraine war, President Biden used this strategic petroleum reserve a lot. Oil reserves have been utilized in ways that have never before been done in history.
According to the above chart, there was a 726 million barrel oil reserve that has now decreased to 372 million barrels.
Increase Reserve
President Biden stated that if the price of oil falls from $67 to $72 per barrel, we would start purchasing oil from the market and putting it in reserve.
Game
The United States is protecting its national interests, and the European Union has set a limit that it would only buy oil from Russia at a fixed price. In such a case, the US will buy oil as soon as the price decreases, and even if the price of oil rises again, the US will not be worried.
In this oil game, OPEC has decided not to allow oil prices to go below $67. Previously, the United States controlled all of the oil-producing nations and made them dance at the tip of their fingers, but now it’s OPEC’s turn.
Surge
Bank failure, recession, oil war, and money printing are all putting pressure on fiat currency. Fiat money is connected to gold. The value of gold will rise as more fiat currency is dumped onto the market. In this circumstance, the shortage of gold will grow, increasing demand for both real and digital gold.
Yesterday, XAUUSD broke the $2000 barrier. Now, XAUUSD will ride the bull.
Ethereum has broken the strong resistance of $1850. ETH will likewise ride the bull on its way to the $2000. The rise of Ethereum signals the start of the alt-season.
Now it is Bitcoin’s turn.
For over 17 days, Bitcoin has fluctuated between $27000 and $28800. Bitcoin has repeatedly tested the $28800 level, while Ethereum has also initiated a bull rally. BTC is also preparing for a bull run.
In the 4hr chart, a triangle pattern emerged, which was broken by BTC yesterday. If the price of Bitcoin remains above $28400, the chance of the $28800 barrier being broken and testing the $30000 level increases.
But I don’t think the Bitcoin bulls will stop at $30000. If the price remains strong, it has the potential to reach $32000.
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Disclaimer
This is not Financial Advice. This article is meant only for educational purposes. I am just sharing my thoughts and analysis based on my many years of experience.