Reconciled, OPEC + towards a status quo despite American criticism

Divided at the beginning of the summer, the 23 black gold producers of the OPEC + group have found a way of compromise and will try tomorrow, on the occasion of a new summit, not to move away from it despite American pressure. . If negotiations began behind the scenes between members of the Organization of the Petroleum Exporting Countries (OPEC) and their ten allies, “no decision has been taken,” Kuwait Oil Minister Mohammad al-Fares warned on Sunday. , quoted by the official KUNA agency, assuring that “all options” were on the table. Among them, the maintenance of the current policy, which consists of reopening the tap very gradually after the drastic cuts decided in spring 2020 to support the market in the face of the coronavirus pandemic.

Since the beginning of August, the cartel has increased production each month by 400,000 barrels per day, with the long-term objective of putting the 5.4 million barrels a day that it still leaves underground back into the pipes. A priori the meeting should be without surprise after the psychodrama of July: the United Arab Emirates then cried “injustice”, giving rise to an unprecedented public discord with Saudi Arabia. The dispute was finally resolved at an impromptu summit convened on July 18. Abu Dhabi, which campaigned for an increase in the basis for calculating its crude production quota, had won its case: its share as well as those of several other countries (Iraq, Kuwait, Saudi Arabia and Russia) were adjusted to the increase, a revision that will take effect in May 2022.

American pressure

The group also agreed on this occasion to “assess the evolution of the market” in December. Until then, therefore, little chance of a sensational announcement, according to market observers. Warren Patterson and Wenyu Yao, analysts at ING, “do not foresee any change in the group’s production policy”, along with many of their colleagues. If OPEC + should stay true to its line, it is not for lack of pressure from the United States, which on August 11 strongly criticized the cartel’s strategy. According to US National Security Advisor Jake Sullivan, the 23 members of the cartel led by Saudi Arabia and Russia are “not doing enough” to boost oil production, threatening economic recovery and prices at the pump. “The rise in gasoline costs, if not controlled, could harm the current global recovery,” he said. And to add: “While OPEC + recently agreed to increase production, it will not erase the cuts it imposed during the pandemic. “

Nervous market

“I do not think they will answer this call”, then estimated the analyst Andy Lipow, of Lipow Oil Associates, noting that if President Donald Trump did not hesitate to address OPEC directly, the Biden administration had gone through an adviser. “It did not come from the top, the words were not dictated by the American president himself, it makes a difference”, underlined the expert. Unlike the American consumer, the cartel has every reason to be satisfied “with the fairly rapid recovery in oil prices last week after the lows of the previous one”, resume ING analysts.

The prices of the two benchmarks for crude on both sides of the Atlantic, North Sea Brent and US WTI, in fact posted record weekly gains in 2021 on Friday, of more than 10%, and were sailing yesterday. at midday around $ 70 a barrel. But the market remains nervous and subject to possible epidemic rebounds linked to the Delta strain of Covid-19, such as the one that hit India in the spring and to a lesser extent China during the summer. Lockdowns and other measures restricting the movement of goods and people they entail are damaging demand for crude and have an immediate impact on prices per barrel.

Source: AFP

Divided at the beginning of the summer, the 23 black gold producers of the OPEC + group have found a way of compromise and will try tomorrow, on the occasion of a new summit, not to move away from it despite American pressure. . If the negotiations began behind the scenes between the members of the Organization of the Petroleum Exporting Countries (OPEC) and their ten allies, “none …

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