The OPEC + countries decided on Thursday to slow the pace of production increases, resisting calls from US President Joe Biden to open the oil floodgates further in an attempt to stem the surge in prices.

The Organization of Petroleum Exporting Countries (OPEC), led by Riyadh, and its allies led by Moscow, have agreed on an almost ridiculous increase for the month of September: namely "100,000 barrels per day", compared to some 432,000 then 648,000 additional barrels set in previous months, the alliance announced after a ministerial meeting.

“Setback in US-Saudi relations”

Oanda analyst Edward Moya quipped about “the smallest hike in OPEC+ history, which will not help overcome the current energy crisis”.

"The Biden administration will not be happy," he told AFP, predicting "a setback in US-Saudi relations".

“A misery” also according to Han Tan of Exinity, noting that the increase was so small that it pushed crude prices into positive territory for a few hours.

But others, like Stephen Brennock of PVM Energy, saw it as "a symbolic measure to appease" Joe Biden.

The group's decision reflects "the need to juggle between conflicting imperatives", summarizes Matthew Holland, geopolitical analyst for the Energy Aspects research institute: not to pump too much to "support prices" in the face of macroeconomic concerns, but also "to take act of energy price inflation and the US call for higher production”.

The shadow of recession

Beyond geopolitical issues, the recent relative decline in oil prices, against a backdrop of fears of recession, has visibly prompted OPEC + not to take risks.

From their highs last March at levels not seen since the 2008 financial crisis, the two crude benchmarks have lost more than 29%.

The Russian Deputy Prime Minister in charge of Energy Alexandre Novak thus justified “this prudent decision by the uncertainties weighing on the markets”.

Asked about the Rossiya 24 television channel, he spoke of “the increase in Covid-19 cases” and “the disruption of transport and logistics chains”.

Another element is the low reserve capacities of the various members, with the exception of Saudi Arabia and the United Arab Emirates.

The alliance also stressed on Wednesday that they were “extremely limited” due to “chronic underinvestment in the oil sector”, and that it was therefore necessary to act “with circumspection, in response to serious disruptions of the offer”.

OPEC + is struggling to respect the quotas displayed, due to prolonged political crises or 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.

World

Saudi Arabia's GDP continues to grow thanks to oil

World

While dining with Emmanuel Macron, Mohammed bin Salman puts his “gradual rehabilitation” on the menu

  • World

  • Oil

  • OPEC

  • Economy

  • Joe Biden

  • Moscow

  • Saudi Arabia