Under American pressure, OPEC agrees to a minimal increase in its oil production
A lot of noise about nothing. While calls from the West have multiplied in recent weeks, with US President Joe Biden even visiting Riyadh in mid-July to urge Saudi Arabia to open the floodgates to curb price increases, the Organization of the Petroleum Exporting Countries (OPEC ) will ultimately only have decided on a more than symbolic increase in its production of black gold.
Of course, at the end of their last meeting, held on Wednesday, August 3, in Vienna, the cartel member countries agreed to an increase of only 100,000 barrels per day for the month of September, which is in view of the additional barrels set in the previous months ie 432,000 and 648,000 respectively, are marginal.
“While some see it as a failure of the American diplomatic initiative over the past month, In fact, one of the real problems remains OPEC’s ability to produce more,” emphasizes Vincent Manuel, Investment Director at Indosuez Wealth Management. Today, the cartel and its partners show a delay of about 2.8 million barrels less per day compared to the last production increase agreement in June.
Half of this lost production comes mostly from Russia (1.4 million barrels per day), Nigeria and Angola, while Saudi Arabia is producing slightly below quota and the UAE is online. “Saudi Arabia and the Emirates together could theoretically produce 2 million barrels more per day,” Detail Vincent Manuel. In addition to technical difficulties, geopolitics can explain the reluctance, he explains: “Even though Saudi Arabia has been willing to meet US demands, partner countries like Russia, which have a say in raising quotas, want to keep prices high. »
Despite what was seen as an unprice decision, the West Texas Intermediate (WTI) fell to $90.66 a barrel after the sharp rise in US commercial crude reserves. Since the start of the war in Ukraine on February 24 and speculation surrounding Russian production, the latter had peaked at $123.70 in March, a level it returned to in mid-June before slipping towards $95. Over the past three months, this fall in prices coincides with the first signs of a recession, the fall in long-term interest rates and fears over Chinese demand as Beijing resumes its “zero-Covid” policy.
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