Oil: OPEC+ is stepping up the pace and sparing Russia
After months of waiting despite soaring prices, the members of OPEC+ decided on Thursday (June 2) to move up a gear and boost their production, responding to calls from Westerners without upsetting Russia.
The announcement on Monday by the 27 countries of the European Union of an embargo on the bulk of Russian oil has increased fears of shortages and visibly changed the situation for the cartel, which underlines ” the importance of stable and balanced markets “.
Representatives of the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their ten partners led by Moscow have agreed to increase July production “ of 648,000 barrels per day according to a statement released after another whirlwind meeting. The volume was previously set at 432,000 barrels.
This is a turning point for OPEC+, which had limited itself since the spring of 2021 to modest increases in its quotas, with the aim of gradually returning to its levels before the COVID-19 pandemic.
The alliance had so far never deviated from its line, even after the invasion of Ukraine by Russia which accentuated the tensions on the market.
Prices thus climbed to peaks not seen since the 2008 financial crisis, Brent from the North Sea, the benchmark for black gold in Europe, peaking on March 7 at 139.13 dollars a barrel and American WTI at $130.50.
The unity maintained
For Jeffrey Halley, an analyst at Oanda, OPEC+ has given ” some bones to gnaw in the US and Europe amid speculation about US President Joe Biden’s possible trip to the Middle East, ” while preserving the unity “.
An article in the Wall Street Journal had mentioned a possible sidelining of Russia, in difficulty to reach its quotas due to Western sanctions, but OPEC + remained united.
The increase in production is distributed proportionally between each of the members, with identical objectives for Moscow and Riyadh, the two pillars of the alliance.
The 23 members, which pump around half of the world’s oil, have been working together since 2016 to adjust their supply and regulate the price of a barrel.
The increase decided on Thursday, even if it is larger than expected, ” will not significantly relieve a market starved of Russian oil “, argues Jeffrey Halley, especially since many states are struggling to meet the objectives.
” Prices will therefore remain at a high level, Russia leaves satisfied “, he summarizes.
The Deputy Prime Minister in charge of Energy Alexandre Novak also welcomed the decision of OPEC +, taken according to him to anticipate the strong summer demand.
He castigated the embargo approved on Thursday by the 27 EU countries, believing that the Europeans will be the first to “ suffer “.
Break the ice
This turn of OPEC + comes after a series of calls from all sides, in particular from the White House wishing to curb prices at the pump.
The G7 countries had again pointed out last week the ” key role of OPEC+ against the tightening of International markets “.
Saudi Foreign Minister Prince Faisal bin Farhan reiterated at the recent World Economic Forum in Davos that “ the kingdom had done what it could “, according to the economic press.
” The situation is more complex than simply adding barrels to the market “, he had insisted, while the economies of the Gulf derive juicy profits from a high barrel.
” We may be at a crossroads “Comments Ipek Ozkardeskaya, of Swissquote, interviewed by AFP.
Thursday’s decision is ” the sign that the ice between the Saudis and the Americans could finally melt after two years of icy relations “.
If the ties between the two countries are strengthened, Ryad would then agree to ” pump more to compensate for Russian oil losses “, she continues.
Enough to ” further isolate Russia and possibly change the tide of the war “.