OPEC+ pumps more, but not enough to curb soaring prices

OPEC+ pumps more, but not enough to curb soaring prices

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The oil-producing countries of OPEC + renewed their objective on Thursday of opening the valves slightly more widely for this summer, but this will not be enough to curb the surge in prices caused by the war in Ukraine.

Representatives of the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC) and their ten allies (OPEC+) agreed that “August production would be adjusted upwards by 648,000 barrels per day”, as in July , compared to the 432,000 barrels previously set, the alliance announced in a statement after a meeting by videoconference.

The cartel therefore remains on the same line after the turning point made last month. Until then, and since the spring of 2021, it had limited itself to modest increases in its quotas with the aim of gradually returning to its pre-Covid levels.

“Political Theater”

However, the efforts made are too meager to compensate for the lack of oil linked to the establishment by the United States and the European Union (EU) of an embargo on Russian deliveries.

Since the start of the war in Ukraine, Brent from the North Sea, the benchmark for crude oil in Europe, has gained more than 16%, and its American counterpart, WTI, more than 17%.

Around 12:40 GMT, Brent was trading at 115.63 dollars a barrel while that of WTI was trading at 109.04 dollars, prices still very high, the market reacting little to the decision of the alliance, which was widely anticipated.

Faced with soaring prices, France again called on producing countries on Monday to increase their volume “exceptionally”.

The subject will also be on the menu of US President Joe Biden’s visit to Saudi Arabia in mid-July.

Edward Moya, from Oanda, however, has few illusions: “it’s political theater, this trip will not lead to a significant increase beyond what has already been decided”, believes- he.

And even if OPEC+ gave in to calls, “it would not have the capacity”, continues the expert, recalling that many members “are subject to international sanctions or suffer from production problems”.

As a result, the quotas set are rarely reached.

Members on the sidelines

A target of the United States and the EU since the invasion of Ukraine, Russia has joined the ranks of undesirable countries placed under sanctions, alongside Iran and Venezuela.

As for Libya, another member of the alliance, it is in the grip of a long and serious politico-institutional crisis, pitting two rival governments against each other.

Oil production, the main source of income, is hostage to these divisions with many sites forcibly closed.

Other nations such as Nigeria, Congo or Equatorial Guinea are bad students, the lack of investment in oil infrastructure at the height of the pandemic preventing them from achieving their objectives.

Even the frontrunners – the United Arab Emirates and Saudi Arabia – would struggle to boost their volume, according to remarks reported this week by French President Emmanuel Macron.

“If this proves to be correct, it means that OPEC+ oil production in July and August will not increase further despite the recent agreement”, worries Stephen Brennock, of PVM Energy.

“Supply issues will therefore remain the main topic for oil, and prices are expected to rise further,” warned Ipek Ozkardeskaya, an analyst at Swissquote Bank.

Unless fears of recession take over and cause prices to fall.

This article has been published automatically. Sources: ats / awp / afp

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