Representatives of the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC) and their ten partners (OPEC+) agreed on Thursday June 2 to increase production to 648,000 barrels per day in July, compared to the 432,000 barrels set for previous months. Large volumes of oil on the market: enough to dispel fears of gasoline shortages that we could have for this summer. Even if on the government side, it is explained that these fears are unfounded and that there was enough fuel for this summer. The State has the equivalent of three months of strategic stocks in reserve, to which are added commercial stocks, so don’t worry.
This decision by the OPEC countries is a good signal, because Westerners have been asking them to open the floodgates for months. The organization turned a deaf ear: it must be said that maintaining a very expensive barrel – at more than 100 dollars – brings them a lot of money. OPEC finally agreed.
The embargo of the European Union on Russian oil, announced at the beginning of the week, has visibly weighed. Until now, OPEC had remained in solidarity with Russia, which is one of its associate members, but here it has chosen to take a little distance, without however breaking the alliance. And there have been a lot of exchanges, pressure from the United States on Saudi Arabia, which is the de facto leader of OPEC. Thursday, June 2, the White House immediately welcomed this announcement.
Logically, if there are more volumes on the market, oil prices should go down. But the problem is that these more ambitious OPEC quotas are not going to solve everything. Even if it represents half of the world’s oil supply, OPEC will not be able to replace all the volumes lost from Russia, especially since with the recovery and the end of the pandemic, travel is soaring again. People travel, especially in summer.
But above all, before the war in Ukraine, oil prices were already on the rise, because we consume much more of it than we can produce. To find a barrel at 70 dollars, we would have to reduce our consumption by 10%. Cheap oil is not for tomorrow.