Oil wells in Baku on March 19, 2019 (AFP/Mladen ANTONOV)
The twenty-three members of the OPEC+ alliance decided on Wednesday to keep the modest rate of increase in their production, despite the surge in the price of black gold and the geopolitical tensions which pose a threat. on supply.
Representatives of the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC) and their ten allies via the OPEC+ agreement agreed “to adjust their total level of production by 400,000 barrels per day for the month of March”, said OPEC announced in a press release after a brief meeting, the outcome of which was widely anticipated.
This gradual strategy, renewed from month to month, was initiated in the spring of 2021 thanks to the recovery in demand, after drastic cuts to deal with the Covid-19 pandemic.
“The news is hardly surprising,” commented Edward Gardner of Capital Economics in a note.
OPEC + has never deviated from its line, “even in December when oil prices plunged following the emergence of Omicron”, the variant of Covid-19 which had momentarily affected demand, recalls the analyst , or in the current context of soaring prices.
In January, the price of a barrel of West Texas Intermediate (WTI) like Brent rose by more than 16%, the two crude benchmarks reaching new highs for more than seven years.
After the publication of the decision, the market accentuated its rise, the WTI brushing the symbolic bar of 90 dollars.
– Objectives not achieved –
In reality, OPEC + is not even “able” to achieve its current objectives, analyzes Bjornar Tonhaugen, at Rystad Energy.
Under these conditions, “announcing a higher increase in production would not make sense and would only harm the credibility” of the group, underlines Carsten Fritsch of Commerzbank.
“This is because a number of countries, such as Angola and Nigeria, are simply not in a position to increase their production further” due to lack of sufficient investment during the pandemic and before, he explains. -he. And the other states don’t want to close the gap.
According to a survey by the Bloomberg agency, the total volume of OPEC + increased by only 90,000 barrels per day in December, far from the target set at 400,000 barrels.
“Russia is fulfilling its commitments”, reacted for his part the Russian Minister of Energy Alexandre Novak, to the Russian television channel Rossiya 24. He also mentioned “the many uncertainties” still weighing on demand while the pandemic is still here.
For Louise Dickson, of Rystad Energy, the alliance of 23 holds the key to balancing “an oil market in need of supply” and stopping the overheating of prices. “The only short-term solution will have to be led by Saudi Arabia, the producer with the largest spare capacity.”
– Geopolitical crises –
Another country whose contribution could be decisive: Iran, a heavyweight whose exports are currently limited by American sanctions.
Talks in Vienna to bring the United States back into the Iran nuclear deal have entered the home stretch. If successful, the Islamic Republic would benefit from the lifting of punitive measures against it.
In the meantime, the market is likely to continue its ascent, boosted by strong geopolitical tensions which involve the behemoths of the production and export of black gold: Russia, Saudi Arabia and the United Arab Emirates.
The United Arab Emirates intercepted a ballistic missile launched by Houthi rebels in Yemen on Monday, the latest attack against the Gulf country which is part of a military coalition led by Riyadh.
But it is another escalation that occupies everyone’s mind: tensions are at their highest between Moscow and the West over Ukraine, near which Russia has massed tens of thousands of soldiers and heavy weapons.
“As long as the situation worsens, this crisis can only continue to push up” prices, estimates for AFP Neil Wilson, of Markets.com.
The next OPEC+ meeting is scheduled for March 2.
© 2022 AFP
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