A decision that took everyone by surprise. On the eve of the weekend again, delegates among the 23-member oil alliance around Saudi Arabia and Russia assured that the course would not change during the virtual OPEC+ meeting. Formally, the more than 1.6 million barrels of crude that will be withdrawn from the market are not the result of a wholesale decision, but of a sum of “voluntary” initiatives, where everyone prefers to refer to a simple “precautionary” measure. . And despite this undeniable destabilizing effect, the representative of one of the producer States affirms that the intention was only to send a “positive message” to the market just before the official meeting on Monday.
For Ole Hansen, a commodity strategist at Danish bank Saxo, this collective decision “came out of nowhere.” In comments reported by market clockHe especially believes that it shows how much the Saudi energy minister “loves to take the market on the wrong foot”, especially when it comes to “hurting” short sellers.
upset saudi arabia
However, the Organization of the Petroleum Exporting Countries number 1 does not point only to adverse speculation. It could well be, according to various analyses, that Saudi Arabia wanted to express all its discomfort to the US government, which stated its desire to take “years” to rebuild its strategic oil reserves, after having nonetheless assured Riyadh that it would act in this direction. , as soon as possible, as soon as prices drop.
If Sunday’s decision is a wake-up call, the Saudis can afford it, as they have much less to fear from a short-term boost from alternative productions, the result of chronic global underinvestment in oil exploration and infrastructure. With such control now of the supply structures, an expert in London explains in any case that this alliance of 23 can easily anticipate a possible weakening of demand due to the looming banking crisis in the United States and Europe.
“Undesirable” restrictions
The White House National Security Council spokesman immediately stated that these OPEC+ restrictions are not “desirable” and that this has been “clearly signaled” to stakeholders. This irritation seems all the more pronounced as the US government is not in a position to retaliate quickly in the market, having sold about half of its emergency reserves. What’s more, a specialist in New York considers it inappropriate for the Biden administration to complain when it has not taken advantage of temporary price drops to replenish its stocks.
But, strictly speaking, this technical parameter would only be peripheral, because there is also the conviction that a fluctuating diplomacy of the United States in the Middle East only pushes the Gulf monarchies to strengthen their alliance with Russia in hydrocarbons.
seen from moscow
To justify this weekend’s move, Moscow advances the Western banking crisis and global economic uncertainty. His deputy prime minister, Alexander Novak, blames energy policy for “unpredictable and myopic decisions.” For the Russian business journal Kommersant, “the main OPEC countries have not let us down.” Inferring that, viewed from Moscow, it will be more difficult for Westerners to enforce their G7 and EU cap on Russian oil prices, decided last December. Japan, a member of the G7, has just obtained an exception on this point to facilitate its own supplies and it is not ruled out that others may claim it in turn.
We will also have to follow the reactions in India and China. Indians, who are buying more and more crude from the Russians, will still be forced to tighten their monetary policy more than they expected. As for the Chinese, they may feel that they are not really getting paid in exchange for their successful mediation efforts between Saudi Arabia and Iran, as well as their strategic partnership with Russia. The day-to-day sale prices of crude oil do not distinguish between consumer states according to their guidelines.
Source: BFM TV
