The surprise effect was total. Saudi Arabia, the Gulf countries and other oil-producing countries, such as Russia, united within OPEC +, announced on Sunday April 3, in the middle of the afternoon, a drop in their production of oil. order of 1.16 million barrels per day (bpd).
It will begin in May and should continue until the end of the year. In October 2022, they had already reduced extraction volumes by two million barrels per day for the whole of 2023.
This new cut, perfectly orchestrated, represents a little less than 1% of world demand, that is to say, not much, at first sight. But this decision was enough to push up oil prices, which is the primary goal. In Europe, the barrel of Brent gained more than 6%, this Monday, April 3 in the middle of the session, to €84.50. In the United States, the WTI barrel climbed by nearly 6%, returning to just above 80 dollars, its strongest daily increase in the space of a year.
► Why this drop in production?
It is a question of keeping the incomes of the producing countries afloat. This is the main reason. Oil prices had fallen significantly in recent months, due to the slowdown in demand, particularly in Europe, and uncertainties regarding the Chinese economy.
The barrel of Brent had fallen to 72.50 dollars in mid-March. It was still around $90 this fall, after hitting $120 in June. By turning off the tap a little, the 23 members of OPEC+ are seeking to raise prices. Russia needs it to finance the war in Ukraine, the Saudis to maintain their lifestyle. In 2022, Saudi Arabia’s GDP grew by 8.9% with a barrel at 101 dollars on average during the year.
► Can it last?
In recent months, all analysts who expected dissension among cartel members, as has happened so often in the past, have been wrong. The firm line announced in October has not cracked. Quite the contrary, and despite the indignant reactions of American President Joe Biden, who is clamoring for an increase in drilling to bring down prices at the pump.
For some members of the cartel, this reduction in production is likely to continue, as they are unable to increase their level of extraction due to lack of sufficient investment. This is the case of Iraq and Nigeria, for example.
However, some economists remain circumspect about the impact of this reduction. They remain riveted on the macroeconomic indices to decide. If the situation deteriorates in Europe and the United States, prices will not rise much. But if China continues its policy of reopening borders, the situation could become more tense.
OPEC is still expecting global demand to increase by 2.3% in 2023, to 102 million barrels per day. In China, it would be up 4.7%, to 16 million barrels per day.
► What are the consequences for consumers?
They are quite fast. It generally takes about ten days for the rise recorded on the markets to be reflected at the pump. But on a tight market as is currently the case in France, with supply difficulties linked to strikes in refineries, the first effects can be felt at the end of the week.
Since early March, the SP95 has already risen by 8 cents per liter to an average of €1.942. For its part, diesel lost 3 cents over the same period, to 1.809 per litre.
Given the low margins they make on products, distributors have little leeway to contain the rise. However, some may be called upon, sooner than expected, to implement their commitments. This is the case of TotalEnergies, which announced in February that the prices of diesel and gasoline would not exceed €1.99 per liter in 2023 in its network of some 3,400 service stations.