2024-03-04 23:04:02
Supporting oil prices has been the objective for months of the main producing states, which again this weekend decided to limit their supply to boost prices. The result is currently still far from the objectives hoped for by Saudi Arabia.
At each deadline, the observation of the oil giants is the same: the global economic recovery is too timid to absorb more crude. There is therefore no question of releasing the volumes voluntarily kept underground for months, unless we want to lower prices, which is obviously not the objective of the countries grouped within OPEC + -OPEC and its allies- to start with Saudi Arabia. The leader of the organization in fact needs a barrel above 90 dollars, and even rather close to 100 dollars, to finance his ambitious economic reform program.
Prices already “very high”
On Sunday, several states announced that they wanted to tighten the floodgates for three additional months. Saudi Arabia, Kuwait, Algeria, Oman, Iraq, Kazakhstan, the United Arab Emirates, but also Russia are concerned. It is therefore on paper, five million barrels per day which could still be sacrificed, compared to the end of 2022, and this at least until June 1, the date of the next meeting of the ministers of the Organization in Vienna, the headquarters of the cartel, whose unity has been put to the test for several months on these questions of voluntary cuts.
But nothing says that this will be enough to significantly increase crude oil prices. This decision was in fact expected and has already caused an increase in recent days which has brought the price of Brent to 83 dollars. The current price is already considered very high compared to the state of supply and demand, recalls an oil trader.
Maintain price stability
« Few people see crude oil prices exceeding $80 this year, barring a major external shock. », he explains. The current price has already integrated the major geopolitical shocks of the moment, and not the least, adds our interlocutor, namely the crisis between Israel and Hamas, the tensions in the Red Sea and the war in Ukraine.
Failing to have a significant effect on prices, the decision taken on March 3 should in this context above all make it possible to maintain price stability, or even prevent them from falling again.
Also read: Oil: relatively stable prices despite geopolitical turbulence
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