Published on :
The OPEC+ countries decided on Wednesday August 3 to slow down the pace of production increases. They are resisting calls from US President Joe Biden to open the oil floodgates further in an attempt to stem soaring prices.
The Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and its allies led by Russia, have agreed on an almost ridiculous increase in production for the month of September: namely ” 100,000 barrels per day “. This figure is to be compared with some 432,000 then 648,000 additional barrels set in the previous months, the alliance announced in a press release after the meeting. Prices immediately rose.
The 23 members were to decide this Wednesday on a new strategy, the current agreement coming to an end: on paper, they have returned to pre-pandemic production levels. In the spring of 2020, the group had chosen to leave millions of barrels of oil underground, so as not to flood the market with crude oil that it could not absorb due to a collapse in demand.
By its decision, OPEC+ demonstrates that it remains united and spares Russia, whose interests are diametrically opposed to those of Washington. In the press release, she insists on “ the importance of maintaining the consensus essential to the cohesion of the alliance ».
Joe Biden in Saudi Arabia
Hoping to influence the decision, Joe Biden had visited Saudi Arabia for the first time as president of the United States in mid-July, far from his remarks on a “pariah” state after the assassination of dissident journalist Jamal Khashoggi. His goal was to convince the kingdom to pump more to curb soaring fuel prices.
Last week, French President Emmanuel Macron was also on the move in receiving Saudi Crown Prince Mohammed bin Salman. At the end of a meeting denounced by human rights defenders, the two leaders said they wanted ” intensify cooperation” to « mitigate the effects in Europe, the Middle East and globally of the war in Ukraine.
Beyond geopolitical issues, the recent relative decline in oil prices, against a backdrop of fears of recession, may have prompted OPEC+ to play it safe. From their highs last March at levels not seen since the 2008 financial crisis, the two crude benchmarks have lost more than 26%. Especially since the cartel is taking advantage of the current situation. Saudi Arabia recorded strong growth in the second quarter of 2022, boosted by black gold.
Another element is the low reserve capacities of the various members, with the exception of Saudi Arabia and the United Arab Emirates. OPEC+ is indeed struggling to respect the quotas displayed, due to prolonged political crises or even the lack of investment and maintenance of infrastructure during the pandemic. Russian production, under the yoke of Western sanctions in connection with the invasion of Ukraine, is also reduced.
(With AFP)