The members of OPEC+ have opted for only a symbolic opening of their floodgates.
Highly anticipated, the meeting of crude oil exporters united under the name OPEC+only gave birth to a few more drops of black gold. The thirteen member countries of OPEC and their ten allies, including Russia, have agreedto increase production by 100,000 barrels per day in Septembere “.
A derisory amount compared to world consumption (around 100 million barrels per day) or to the increases decided in the previous months, some 430,000 and then 650,000 additional barrels.
Members of the cartel led by Saudi Arabia and Russia have resisted calls from Joe Biden. The American president had made the trip to Riyadh in mid-July, making friends with a frowned upon state since the brutal assassination of dissident journalist Jamal Khashoggi in 2018. Washington had also agreed to sell defensive missiles to Riyadh and the United Arab Emirates (UAE), hoping to get more oil. As inflation in the United States reaches its highest level in forty years, three months before a key election deadline, Joe Biden wants to lower fuel prices.
A symbolic increase
The increase announced Wednesday, “symbolic” or “almost insulting” according to observers, will not help to overcome the energy crisis. It immediately drove up crude oil prices, which then fell. At the end of the afternoon, a barrel of Brent was trading at less than 99 dollars.
The OPEC+ decision shows that the organization remains united and spares Russia, whose interests are diametrically opposed to those of Washington. The cartel insisted Wednesday on “the importance of maintaining consensus “.
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In the spring of 2020, at the start of the pandemic, OPEC + decided to drastically reduce its production. The objective was to avoid flooding the market when the Covid-19 had more or less brought global activity to a halt, and to support prices.
The alliance, which pumps nearly 40% of world production of black gold, then undertook, in the spring of last year, to reopen its floodgates gradually. Almost a year later, this move is believed to have brought production back to pre-Covid levels.
But the situation is complex. In fact, many producers have not managed to return to their level of production before the epidemic, due to lack of investment or because of more or less local political crises. Among the members of OPEC+, only Saudi Arabia and the UAE have a real capacity to increase their production. And again, these two countries indicated to Emmanuel Macron, who received the Saudi Crown Prince Mohammed Ben Salman last week, that their room for maneuver was reduced.
OPEC+, which will meet again on September 5, also fears a deterioration in global economic activity that would melt demand and prices. These fears have caused the barrel of Brent to fall below 110 dollars since the beginning of July after months of increases linked to the war in Ukraine and Beijing’s “zero Covid” policy.
However, the exporting countries, which benefit greatly from the high prices, have little desire to change the situation. Saudi Arabia, for example, saw its GDP jump by nearly 12% in the second quarter of 2022, thanks to soaring oil revenues.
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