Monday, June 17, 2024

The OPEC + alliance is facing pressure, but it does not want to change its strategy



Vienna (AFP) – The Oil Exporting Countries (OPEC) and their partners in the OPEC Plus are expected to continue their strategy of gradually increasing production on Thursday, despite Western pressure to end the price volatility in Ukraine amid the war.

Analysts believe that the 13 members of the Riyadh – led OPEC and their ten allies in the Moscow-led OPEC + are likely to increase their total production volume by 400,000 barrels a day in May.

“OPEC + surprised markets many times during its monthly meetings, but maintained the current fundamental situation,” said Stephen Innes, an analyst at SPI Asset Management.

He added that “evidence does not indicate any deviation from the policy that began in the spring of 2021”.

Discussions of the organization will begin with technical discussions before the public meeting via video link at 13:00 (11:00 GMT) at its headquarters in Vienna.

However, expectations are high, especially during the 2008 financial crisis when oil prices touched a record high of 7. The Western Texas Intermediate crude hit a high of $ 139.13 a barrel and the WTI $ 130.50.

Since then, prices have fallen from their highest level, making it “less likely that OPEC + will decide to increase its output,” says Gorston Fritz, a researcher at Commerzbank.

On Thursday, the White House is expected to announce plans to withdraw up to one million barrels a day from US strategic reserves, according to sources close to the Bloomberg Agency.

The price of a barrel of US West Texas Intermediate crude oil has fallen more than 5 percent since the start of Asian markets.

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International calls

For the “OPEC +” alliance, which was established in 2016 with the aim of regulating the market, Fritsch pointed out that the recent price increase was “mainly due to geopolitical risks, and not due to a real shortage of supply”.

As prices rose due to Western sanctions on Moscow and lost hope for progress in the peace talks, the war raised fears that Russia’s oil supply would be disrupted and caused sharp fluctuations.

But calls from the international community have multiplied, especially after the United States and Britain decided to stop importing oil from Russia, making it the second largest crude exporter in the world after Saudi Arabia.

German Economy Minister Robert Hebeck also launched an “urgent appeal to oil-exporting countries the next day to increase production to mitigate market shocks.”

For its part, the International Energy Agency described the company’s results as “disappointing” in the past, urging the OPEC + alliance to be “on the right side”.

“I hope this meeting will bring positive news that will help ease the pressure on the oil markets,” IEA Executive Director Fatih Birol said in mid-March.

The G7 countries have sent the same message, while British Prime Minister Boris Johnson visited Riyadh and sought to increase productivity with the leaders of Saudi Arabia and the United Arab Emirates.

“Stay here”

But despite all these international efforts, the Gulf states are still rejecting Western demands.

At this point, the OPEC + alliance looks stronger than ever. UAE Energy Minister Suhail al-Masroui said on Monday that it (the coalition) was “staying here”, signaling its commitment not to let the “political” system get in the way.

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“If someone is not willing to deliver 10 million barrels a day, we can not replace the Russians,” he said.

For his part, Saudi Energy Minister Abdul Aziz bin Salman reiterated his commitment to OPEC + on Tuesday, saying that the agreement “otherwise, there will be no stability in the energy market” and “the problem of price volatility will worsen”. ”

Although he supports OPEC +’s non-political “culture”, many experts believe that Saudi intervention in the markets would be seen as a betrayal of Russia, preventing it from using its oil and gas exports to put pressure on the West.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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